2006 (4) TMI 425 - AT - Central Excise

Summary

Issues:
Admissibility of deduction of average freight for arriving at the assessable value from the contracted price.

Analysis:
The appeals were filed against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), challenging the disallowance of abatement of transportation cost effective from 1-7-2000. The appellants transported goods to various dairy units and claimed abatement on an averaged basis, which was allowed by the Department initially but later proposed to be disallowed. The Department contended that only the actual cost of transportation from the place of removal to the place of delivery should be eligible for abatement as per Rule 5 of the Valuation Rules, 2000. Differential duty, penalties, and interest were imposed based on this disallowance.

The learned Advocate for the appellants argued that the abatement should have been allowed to the extent of actuals, as claimed on invoices, and supported by a Chartered Accountant's certificate. They also cited a Board's Circular to support their claim that freight and insurance charges need not be added to the assessable value when sales are made at the factory gate. The appellants further argued that even after 1-7-2000, the abatement of equalized freight should be allowed, relying on various case laws.

The Tribunal considered the matter and held that the appellants were entitled to claim abatement towards equalized freight from the contract value to arrive at the assessable value. They emphasized that there is provision in the Excise Law for claiming such abatement and cited case laws supporting the admissibility of equalized/average freight abatement even after 1-7-2000. Consequently, the Tribunal allowed the appeals, stating that there was no justification for levying penalties or demanding duty in this case.

In conclusion, the Tribunal ruled in favor of the appellants, allowing the appeals and providing consequential relief based on the admissibility of abatement towards equalized freight from the contracted price to determine the assessable value.