2013 (6) TMI 449 - AT - Central Excise

Valuation - inclusion of freight - transportation of explosives - assessee was issuing separate commercial invoices charging for the freight of the goods from place of removal to the place of delivery and also for the return charges of the special vehicle from the place of delivery to the place of removal. - Held that - It is already decided by the Apex Court in the case of Escorts JCB (2002 (10) TMI 96 - SUPREME COURT OF INDIA) that in this type of situation the place of removal is the factory gate or depot and not the place of delivery to the buyer. The issue that cost of transportation from place of removal to the place of delivery will not form part of assessable value is also decided in the said case and many other decisions. - Decided in favor of assessee.

Summary

Issues:
- Appellants not paying excise duty on freight charges for delivery and return of vehicles
- Interpretation of Central Excise Act regarding assessable value and transportation costs

Analysis:
1. Issue 1: Appellants not paying excise duty on freight charges for delivery and return of vehicles
The Appellants, engaged in manufacturing explosives, were selling goods to Coal India Ltd. and using specially designed vehicles for transportation due to safety concerns. The Revenue contended that excise duty should be paid on freight charges for delivery and return of vehicles. Show Cause Notices were issued, demanding excise duty for these charges, which were confirmed by the adjudicating authority with penalties imposed. The Appellants argued that they paid excise duty based on the price for delivery at the time and place of removal, as per Section 4(a) of the Central Excise Act. The Revenue's argument was that charges for transportation up to the place of delivery should be included in the assessable value.

2. Issue 2: Interpretation of Central Excise Act regarding assessable value and transportation costs
The Appellants relied on legal provisions and past decisions to support their stance. They cited Rule 5 of the Valuation Rules, which states that the cost of transportation from the place of removal to the place of delivery should not be subjected to duty. Additionally, they referenced previous judgments such as Escorts JCB Ltd. v. C.C.E. and Haldia Petrochemicals Ltd. v. C.C.E. to argue their case. The Revenue, on the other hand, argued that charges for transportation should be included in the assessable value if not separately shown in the invoice. The Tribunal analyzed the arguments and legal precedents, ultimately ruling in favor of the Appellants, stating that charges recovered towards freight, including return charges for specialized vehicles, should not form part of the assessable value.

3. Conclusion
The Tribunal allowed the appeals filed by the Appellants, setting aside the orders of the lower authorities. The decision was based on the interpretation of the Central Excise Act and relevant legal provisions, emphasizing that charges for transportation should not be included in the assessable value if separately shown and billed, as per established legal principles and past judgments.