2012 (12) TMI 305 - AT - Central Excise

Demand of duty alleged that the transportation cost/freight charges from the place of removal to the place of delivery ought to have been included in the value of the goods for assessing the excise duty payable Held that;- There is nothing on record to suggest that the respondent-assessee and the customer to whom the goods were sold were related parties - Rule 5 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules 2000 is not attracted - excess amount of freight collected by the assessee need not form part of assessable value - if the place of removal of goods is factory of the assessee then transport charges will not be included in the assessable value appeal dismissed

Issues:
1. Central excise duty demand and penalty imposed on the appellant.
2. Inclusion of transportation charges in the value of goods for excise duty assessment.
3. Interpretation of Section 4(1)(a) and (b) of the Central Excise Act, 1944.
4. Applicability of Rule 5 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.
5. Consideration of relevant case laws in determining the valuation for excise duty purposes.

Central excise duty demand and penalty imposed on the appellant:
The appeal was filed against the order of the Commissioner (Appeals) which allowed the appeal of the assessee, setting aside the order-in-original confirming the central excise duty demand and penalty. The appellant, a manufacturer of CTD bars, had charged transportation charges over and above the price of goods supplied to customers. The department contended that transportation costs should be included in the value of goods for excise duty assessment, leading to a demand of Rs. 6,81,428/- with interest and a penalty of equal amount.

Inclusion of transportation charges in the value of goods for excise duty assessment:
The department argued that transportation costs from the place of removal to the place of delivery should be part of the goods' value for excise duty calculation. A show cause notice was issued to the respondent, and after contesting the notice, the demand and penalty were confirmed. However, the appellate authority allowed the appeal, leading to the current appeal.

Interpretation of Section 4(1)(a) and (b) of the Central Excise Act, 1944:
The appellant contended that the case falls under Section 4(1)(b) rather than 4(1)(a) as the goods were transported to the place of destination in their own vehicle against freight charges. The appellant argued that the transaction should be treated as a sale on FOR basis, invoking Rule 5 of the Central Excise Valuation Rules, 2000. The appellant highlighted the importance of correctly interpreting the provisions of the Act in determining the excise duty valuation.

Applicability of Rule 5 of the Central Excise Valuation Rules, 2000:
The discussion revolved around the application of Rule 5, which specifies the valuation of excisable goods sold under different circumstances. The Tribunal analyzed the provisions of Rule 5 in conjunction with the facts of the case to determine the correct valuation methodology for excise duty purposes.

Consideration of relevant case laws in determining the valuation for excise duty purposes:
The Tribunal referred to case laws such as M/s. Baroda Electric Meters Ltd. and Escorts JCB Ltd. to support its decision. These cases were cited to establish the correct interpretation of the law regarding the treatment of transportation charges in excise duty valuation. The Tribunal found that the impugned order was in line with legal precedents and dismissed the appeal, deeming it devoid of merit.

← Previous Next →