2007 (7) TMI 74 - AT - Central Excise

Valuation (Central Excise) - Revenue contended that in respect of freight incurred in the return transportation of empty cylinders and collected from the buyer through debit not includible in the assessable value of goods - Held that revenue contention was not correct and set aside

Summary

Issues:
1. Inclusion of freight incurred in the return transportation of empty cylinders in the assessable value of goods under Rule 5 of the Central Excise Valuation Rules, 2000.

Analysis:
The appellants, who are manufacturers of chemicals, including chlorine, cleared liquid chlorine to a buyer during a specific period. The invoices indicated the factory gate sale price and the freight incurred in transporting the chlorine-filled cylinders to the buyer's premises, which the buyer also paid. However, the Revenue contended that the freight incurred in the return transportation of empty cylinders, collected from the buyer through debit notes, should be included in the assessable value of the goods. Both authorities upheld this view, leading to the present appeal.

After considering the submissions from both sides, the Tribunal noted the appellant's reliance on a previous decision in the case of Associated Drug Company v. CCE, Bangalore, where it was held that charges incurred in transporting excisable goods from the factory gate, the point of sale, should not be included in the assessable value of the goods. On the other hand, the Revenue relied on a Board's Circular stating that the cost of return of empty vehicles to the factory, if recovered from the buyer, should not be deducted. The Tribunal found no similarity between the factual situations in the Circular and the cited case, ultimately favoring the Tribunal's decision.

The Tribunal concluded that if onward freight was not to be included in the assessable value of the goods, then there was no basis for return freight to be included, regardless of it being mentioned in the invoices. The principle established in the cited decision was deemed applicable to the return freight as well. Consequently, the impugned order was set aside, and the appeal was allowed.

This judgment clarifies the application of valuation rules concerning the inclusion of freight costs in the assessable value of goods, emphasizing the importance of previous decisions and principles established by the Tribunal in similar cases.