JUDGMENT :

A.K. Sikri, J.

1. The Respondent/Assessee herein manufactures transformers. The supply of these transformers by the Assessee is primarily to the State Electricity Boards. The Assessee is exigible to the levy of Central Excise under Central Excise Act, 1944 (hereinafter referred to as the 'Act'). Goods, namely, the transformers which are cleared by the Assessee were supplied to the State Electricity Boards. These are subject to excise duty which the Assessee has been paying to the Appellant herein (hereinafter referred to as the 'Revenue"). The dispute in the present case, however, is about the 'transaction value' on which the excise duty is payable Under Section 4 of the Act. The Assessee is paying the duty on the price at which the said transformers are sold to the Electricity Boards. However, the Revenue wants that while arriving at the price of the said goods, transportation cost and transit insurance cost be also included to arrive at the correct transaction value in terms of Section 4(3)(d) of the Act.

2. Since the Assessee was not including the transportation and transit insurance cost, a show cause notice was issued on 24.07.2001 proposing to recover a sum of Rs. 1,1