Full Judgment
2. These appeals arise out of two refund claims filed by the common appellant in respect of two separate claims filed on the allegation that freight and forwarding charges had been included in the assessable value, though such charges were not includible and excess duty had been paid and the same should be refunded. The Assistant Collector gave partial relief but denied refund on the element of service charges, that is, expenses in connection with the typing, preparing zerox copies and sending telegrams, purchasing strapping machine, for packing and repacking and loading and unloading expenses at the depot. Collector (Appeals) having confirmed these orders, the present appeals have been filed.
3. It appears that all the goods manufactured in the factory were being cleared to the depots and sales effected at the depots. As such no factory gate price was available. In these circumstances, Section 4(2) of the Central Excise Act, 1944 was attracted and the value was determinable with reference to the price for delivery at a place other than the place of removal and cost of transportation from the place of removal to the place of delivery shall be excluded from such price. The place of removal was the factory gate. The place of delivery, in so far as the goods in respect of which loading or unloading charges were being collected, was the premises of the dealer away from the premises of the godown. The cost of transportation from the factory gate to the godown and from the godown to the dealer's premises would be covered by the expression "cost of transportation from the place of removal to the place of delivery". The present dispute relates to the cost of unloading and loading incurred at the godown, in order to transport the goods from the factory gate to the godown and from the godown to the dealer's premises. Such cost would certainly be part of the cost of transportation from the place of removal (factory) to the place of delivery (premises of the dealer) and as such admissible for deduction under Section 4(2) of the Act. In Bombay Tyre International Ltd. case, 1983 (14) E.L.T. 1896 (S.C.), the Court held as follows :- "Where the sale in the course of wholesale trade is effected by the assessee through its sales organisation at a place or places outside the factory gate, the expenses incurred by the assessee up to the date of delivery under the aforesaid heads cannot, on the same grounds, be deducted. But the assessee will be entitled to a deduction on account of the cost of transportation of the excisable article from the factory gate to the place or places where it is sold. The cost of transportation will include the cost of insurance on the freight for transportation of the goods from the factory gate to the place or places of delivery." Though at one place reference is made to "place or places where it is sold", a reading of the above observations as a whole will show that what is deductible is the cost of transportation on the excisable articles from the factory gate "to the place or places of delivery".
This is what clearly emerges from Section 4(2) of the Act. Let us take a case of excisable goods handed over to a transporter for transport from the factory gate for delivery at the premises of the dealer and the transporter has his own godown where vehicles are required to be changed and accordingly goods are required to be unloaded from one vehicle and loaded in another vehicle. The transporter will naturally incur some expenditure on this account and collect it from the consignor of the goods (manufacturer) who in turn will collect the same from the consignee (dealer). There can be no doubt that in such cases the entire amount paid to the transporter including the cost element of loading and unloading at the transporter's godown would form part of the cost of transportation and admissible for deduction. It appears to us that the position cannot be different merely because the godown is not that of the transporter but that of the manufacturer.
4. This is the consistent view taken by the Tribunal as seen from Associated Pigments Ltd. - 1989 (40) E.L.T. 186 (Tribunal), Tata Oil Mills Co. Ltd., 1991 (53) E.L.T. 361 (Tribunal) and Patel Detergents - 1996 (87) E.L.T. 546 (Tribunal). Shri M. Ali JDR referred to a decision of the two-Member Bench of the Tribunal taking a contrary view in Hindustan Lever Ltd. -1997 (89) E.L.T. 720 (Tribunal). It appears to us that this decision is contrary to the decision of the Supreme Court in Bombay Tyre International Ltd., affirmed in MRF Ltd. - 1995 (77) E.L.T.433 (S.C.) as also other decisions of the Tribunal including the decision of three-Member Bench of the Tribunal. We follow the decision of the three-Member Bench of the Tribunal and the decision of the Supreme Court and hold that loading and unloading charges at the depot are to be deducted in determining the assessable value.
5. The other controversy relates to the documentation charges, such as expenses on taking zerox copies, typing charges, telegram charges; etc.
These expenses cannot be regarded as part of the cost of transportation and cannot be included in the assessable value.
6. The last controversy relates to the cost incurred by the transporter for repacking the goods. It is clear that repacking was being done by the transporter only for the purpose of ensuring that the goods were not damaged during transport. There is nothing to indicate that such repacking was "necessary" for the purpose of delivery in the wholesale trade at the factory gate or even at the depot. We, therefore, hold that the cost of repacking cannot be included in the assessable value.
7. The impugned orders are set aside to the extent indicated above and the cases are remanded to the jurisdictional adjudicating authority for determining the correct amount of refund, subject, of course, to the provisions of Section 11B(2) of the Act. The appeals are allowed