2006 (2) TMI 463 - AT - Central Excise

Summary

Issues: Whether freight charge when not shown separately in invoice could be allowed as deduction.

In the judgment delivered by the Appellate Tribunal CESTAT, Mumbai, the issue at hand was whether freight charges, when not shown separately in the invoice, could be allowed as a deduction. The Tribunal referred to a previous case involving West Coast Paper Mills Ltd v. CCE, Bangalore, where it was held that if goods are sold for delivery at a place other than the place of removal, the value of such goods should exclude the actual cost of transportation from the place of removal to the place of delivery, provided the cost of transportation is shown separately in the invoice. In the present case, the Tribunal noted that the cost of transportation was not shown separately in the invoice, but since the law did not require charging of duty on freight, the failure to show transport charges separately could not result in the levy of duty on such components. This view was also supported by a similar case involving Mitsu Chem (P) Ltd v. CCE, Thane. The Tribunal granted a total waiver of the pre-deposit requirements and ordered a stay of recovery pending the regular hearing of the appeal. However, it was highlighted that during the regular hearing, it would be necessary to determine whether the deductions claimed were equivalent to actual freight or were disguised components of the excisable value, as argued by the Departmental Representative. The Tribunal emphasized the need to address this disputed issue, as it was not raised in the Show Cause Notice.

The application was disposed of in the above terms by the Tribunal, indicating that the decision was pronounced in court. The judgment provided clarity on the treatment of freight charges in excisable goods transactions, emphasizing the importance of showing transportation costs separately in invoices to avoid duty implications. The Tribunal's decision to grant a waiver and stay of recovery highlighted its consideration of the specific circumstances and legal requirements surrounding the issue at hand.