IMPORTANT POINT
Normal price for determining excise duty is the price at the time of delivery and at the place of removal. Any expenditure incurred after transfer of ownership to the buyer has to be on buyer's account.

Judgment

A.K. Sikri, J.

Respondent is the holder of Central Excise Registration for manufacture of RCC and PSC pipes falling under Chapter Heading 6804/6807 for the first schedule to the Central Excise Tariff Act, 1985. The respondent entered into four agreements for designing, manufacturing, providing at site, laying, jointing and testing of PSC pipes of specified sizes. These are agreements dated 24.06.1996, 01.09.1997, 25.09.1997 and 25.05.1999.

2) It is the case of the Revenue that on the basis of general intelligence collected, respondent/assessee was indulging in evasion of central excise duty by not computing the assessable value of finished goods properly to the extent that it was deducting the amount of freight, insurance and unloading charges from the price excisable goods though the place of removal of finished goods was different from the factory gate. The preventive party visited the factory premises of the assessee on 25.03.2000, conducted enquiries and resumed the records for further scrutiny. After scrutiny of various records and documents, it was revealed that the assessee had received work orders from various Government authorities and private contractors and the agreements entered into by the assessee with the above mentioned parties were for designing, manufacturing, providing at site, laying, jointing and testing of PSC pipes of specified sizes. The agreement entered, therefore, entailed upon the assessee, for delivery of the finished goods and not at the factory gate. It was found that no sale took place till the goods reached the test of the projects.

3) A show cause notice dated 02.11.2011 was issued as to why the differential central excise duty amounting to Rs.43,56,318/- for the period of 01.01.1996 to 30.06.2000 should not be recovered from them under proviso to Section 11A(1) of the Central Excise Act read with Rule 9(1) of the Central Excise Rules, 1994 and why penalty under Section 11AC and interest under Section 11AB should not be imposed. The assessee replied and was given personal hearing. Learned Adjudicating authority vide its order in original confirmed the demand to extent of Rs.36,16,318/-on account of under valuation and on the ground that place of removal finished goods was the buyer's premises and not at the factory gate.

4) Aggrieved by the said order, the respondent filed an appeal before CESTAT. Learned Tribunal vide its impugned judgment and final order dated 30.03.2002 has allowed the appeal on the reasoning that the issue is settled in Escorts JCB Ltd. v. Commissioner of Central Excise, Delhi-II, 2002 (146) ELT 31 (SC) = (2003) 1 SCC 281.

5) Feeling aggrieved by the aforesaid order of the CESTAT, present appeal is preferred by the Revenue under Section 35L(b) of the Act.

6) The respondent has been duly served in the appeal. However, nobody has entered appearance on behalf of the respondent. Matter came up for final arguments on 10.04.2015. On that day, we heard learned counsel for the appellant for some time as the argument remained inconclusive. For remaining arguments, matter was adjourned to 13.04.2015. However, nobody appeared on behalf of the respondent on 10.04.2015 and 13.04.2015. In these circumstances, we had no option but to reserve the matter for judgment after hearing Mr. Kaul, learned ASG, who appeared for the Revenue.

7) Insofar as the legal position is concerned, there cannot be any dispute about the same. Section 4 of the Act is the relevant statutory provision which deals with valuation of excisable goods for the purpose of charging of duty of excise. Relevant portion thereof, as it existed during the period with which we are concerned, reads as under:

“4. Valuation of excisable goods for purposes of charging of duty of excise.-

(1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value shall, subject to the other provisions of this section, be deemed to be-

(a) the normal price thereof, that is to say, the price at