Facts: M/s. Tapi Prestressed Products Ltd. (“The Appellant”) is a manufacturer of pipes, engaged in erection and installation of lift irrigation system in pursuance of which the manufactured pipes are transported to the site of the customer for assembly. The appellant has filed an appeal against the demand of differential duty held as recoverable u/s 11A of Central Excise Act, 1944 for the period March 03 to February 07 along with interest and penalty on the transportation costs incurred for such movement but excluded from the assessable value at the time of removal from the factory.
Applicant’s Contention of law: The Appellant contended with reference to a SC ruling in Commissioner of Customs & Central Excise, Nagpur v. Ispat Industries Ltd. [TS-552-SC-2015-EXC], which scrutinized section 4 of Central Excise Act, 1944 from the pre-1973 enactment through subsequent amendments of 1996, 2000 and 2003 specifically in the context of inclusion of costs after removal from the factory of manufacture and it was concluded that “Rule 5 as substituted in 2003 also confirms the position that the cost of transportation from the place of removal to the place of delivery is to be excluded, save and except in a case where the factory is not the place of removal”.
Held: The Hon’ble CESTAT of Mumbai vide its Order No: A/85109-85110/2019 dated January 17, 2019 observed that, the inclusion of transport cost beyond the factory of manufacture is allowed only upon establishing that the manufacturer continues to be the owner of the goods even at the site of assembly.
CESTAT further observed that, the contract requires assessee to assemble the goods in accordance with the pre-arranged design in a separate transaction in which the goods supplied cannot be rejected by the procurement agency, in which circumstance there is no reason to accept the contention of Revenue that the sale has occurred at the premises of the buyer. Therefore, we hold that the transportation costs are not liable to be included in the assessable value of the accessible goods.
Citation: [ TS-119-CESTAT-2019-EXC ]