2013 (12) TMI 106 - AT - Central Excise

Inclusion of Assessable value u/s 4 of Central Excise Act, 1944 - Additional income recovered as freight/unloading and carting charges over and above the transaction value Held that - Following CCE, Nagpur v. Ram Krishna Electricals Pvt. Ltd. 2011 (7) TMI 976 - CESTAT, MUMBAI - During transportation of goods from the factory gate to the destination there can be certain charges incurred far handling of finished goods which the appellant has recovered only as cost of transportation - There is no evidence on record to show unloading expenses, cartage etc are not borne by the transporter - In the absence of any such evidence, the entire element of freight shown separately in the invoices is nothing else but freight charges - any amount collected separately as freight in the invoices cannot be included in the assessable value even if certain amounts have been collected in excess of the actual transportation cost - amount charged as freight and separately shown in the invoices cannot be included in the assessable value u/s 4 of the Central Excise Act, 1944 decided in favour of Assessee.

Summary

Issues:
Whether additional income recovered as freight/unloading and carting charges over and above the transaction value is required to be added to the assessable value u/s 4 of the Central Excise Act, 1944 or not?

Analysis:
The appellant argued that since the foods are sold at the factory gate and freight to the destination is separately shown in the invoices, it should not be added to the assessable value, citing the Supreme Court judgment in Escort JCB v. CCE. Additionally, the appellant relied on various judgments to support their argument. During the hearing, the appellant referred to judgments of CCE, Surat v. Lohiya Polyester Ltd. and CCE, Nagpur v. Ram Krishna Electricals Pvt. Ltd. on the same issue.

The respondent contended that the charges recovered as freight also included handling and loading charges, which should not be considered as transportation cost. After hearing both sides, the Tribunal had to determine whether the amount shown separately as freight in the invoices could be included in the assessable value u/s 4 of the Central Excise Act, 1944. The department claimed that some charges recovered might include elements beyond transportation costs. However, the Tribunal found that the appellant had only recovered costs related to transportation and not additional handling charges. The Tribunal noted that there was no evidence to suggest that unloading expenses or cartage were not borne by the transporter, leading to the conclusion that the entire freight amount was indeed for transportation.

The Tribunal referenced various judgments to support its decision, including the case of Commissioner of Central Excise v. Accurate Meters Ltd. where the Supreme Court held that transportation costs from the factory gate to the place of delivery should not be included in the assessable value. Similarly, the Tribunal cited the case of Majestic Auto v. CCE, emphasizing that the equalized cost of freight shown separately in invoices should not be part of the assessable value post a certain date. Consequently, the Tribunal held that the amount charged as freight and separately shown in the invoices cannot be included in the assessable value u/s 4 of the Central Excise Act, 1944, thereby allowing the appeal filed by the appellant and setting aside the order-in-appeal dated 1-8-2006.