2013 (12) TMI 984 - AT - Central Excise

Freight charges incurred to be added in the assessable value or not - Supply of the goods to their customers Held that - Following BIRLA CORPORATION LTD. Versus COMMISSIONER OF CENTRAL EXCISE, CALCUTTA-II 2001 (4) TMI 330 - CEGAT, KOLKATA - it was immaterial that the customers bore the freight cost in some cases and assessee in other cases on recovery basis from the customers - That in either case if the declared price is inclusive or freight, equalized amount was deductible - There is no dispute that the charges relate to transportation cost alone from the factory to the consignee end and that the same were recovered - given the same merely its separate non-mention is no legal ground to include the same in assessable value and demand duty - the duty is not recoverable. There is no dispute that the appellant has actually incurred the freight expenses - Merely because the same were shown as handling charges in the ledger, is no ground to deny the deduction of the same - the non-mentioning of separate freight expenses in the invoices would not result in denial of deduction of the same in as much as the clearances was destination based and there is no dispute about the fact that appellant have actually incurred such freight charges Decided against Revenue.

Summary

Issues:
1. Inclusion of freight charges in the assessable value of goods.
2. Requirement of separately showing freight charges on invoices.

Issue 1: Inclusion of freight charges in the assessable value of goods.
The case involved an appeal filed by the Revenue against the order passed by the Commissioner (Appeals) concerning the inclusion of freight charges in the assessable value of goods. The appellant, engaged in the manufacture of writing and printing paper and soda ash, had cleared goods to the Government Printing & Stationary at a specified rate. The Revenue contended that the freight charges incurred by the appellant for supplying goods to customers should be added to the assessable value. The Original Adjudicating Authority confirmed a demand of Rs. 3,75,702/-, dropping another demand of Rs. 4,42,152/-. The Commissioner (Appeals) allowed the appellant's appeal and rejected the Revenue's appeal, stating that the freight charges need to be shown separately on invoices. The Commissioner observed that the appellant had rightly claimed deductions for freight charges as they were duly shown on the invoices. The Commissioner held that the freight charges need not be included in the assessable value if they are separately mentioned on the invoices, regardless of how they are booked in the ledgers. The Tribunal upheld the Commissioner's decision, stating that the amount recovered as freight charges should not be included in the assessable value.

Issue 2: Requirement of separately showing freight charges on invoices.
The second issue in the appeal pertained to the requirement of separately showing freight charges on invoices. The Department alleged that an amount was not separately shown in the invoices, leading to a demand of duty amounting to Rs. 4,42,152/-. The Appellant argued that the amount was recovered as freight and not showing it separately did not warrant inclusion in the assessable value. The Commissioner (Appeals) upheld the Appellant's contention, citing that the cited Rule was not applicable and referring to legal precedents where separate mention of freight charges in invoices was not mandatory. The Tribunal concurred with the Commissioner, emphasizing that the mere non-mention of freight charges separately on invoices did not justify their inclusion in the assessable value, especially when the charges were related to transportation costs and were recovered. The Tribunal rejected the Revenue's appeals, highlighting that the appellant had indeed incurred the freight expenses, and the manner of entry in the ledger or absence of separate mention in invoices did not negate the deduction eligibility for the freight charges.