2005 (4) TMI 441 - AT - Central Excise

Summary

Issues:
1. Inclusion of forwarding charges in the assessable value of goods for excise duty calculation.

Analysis:
The appeal before the Appellate Tribunal CESTAT, NEW DELHI involved a dispute regarding the inclusion of forwarding charges in the assessable value of goods for excise duty calculation. The Commissioner (Appeals) had previously held that forwarding charges should not be included in the assessable value of the goods. The respondent, engaged in the manufacture of excisable goods, supplied goods to the Railway. The adjudicating authority initially ruled that freight charges were not to be included in the assessable value, but forwarding charges were. However, the Commissioner (Appeals) overturned this decision, stating that since the sale occurred at the factory gate and freight charges were not included, forwarding charges should also be excluded from the assessable value.

The crux of the appeal by the revenue was that the deal for supplying goods was finalized after inspection and acceptance by the customer at the buyer's premises, making it the place of removal. The revenue argued that forwarding charges were essentially for the primary removal of the excisable goods. However, the Tribunal noted that the adjudicating authority's finding that the sale was at the factory gate and that freight charges should not be included had not been challenged by the revenue in a separate appeal. Therefore, the revenue could not now claim that the buyer's premises constituted the place of removal. The forwarding charges were paid to a third party for the safe custody of goods until reaching the buyer's premises. Since the goods were assessed at the factory gate, the Tribunal found no error in the Commissioner (Appeals) decision and dismissed the appeal.

In conclusion, the Appellate Tribunal upheld the decision of the Commissioner (Appeals) that forwarding charges should not be included in the assessable value of goods for excise duty calculation. The Tribunal emphasized that since the sale was deemed to occur at the factory gate and freight charges were excluded, forwarding charges related to activities after the sale and should not impact the assessable value. The appeal by the revenue was dismissed, affirming the exclusion of forwarding charges from the duty calculation.