2014 (4) TMI 606 - AT - Central Excise

Valuation of goods - Inclusion of dharmada charges, transit insurance charges and freight charges - Held that - appellant s sales were at the factory gate and during the period upto 30/6/2000, the assessable value was the normal price at the time and place of removal and during the period from 01/7/2000, the assessable value is the transaction value at the time and place of removal and since the place of removal undisputedly is the factory gate, the amounts being charged for freight and insurance would not be includible in the assessable value of the goods. Moreover, when the freight and insurance were being charged separately under debit notes which are like invoices, it cannot be said that the freight and insurance charges were not being separately charged. Therefore, the impugned order upholding the Central Excise duty demand on the freight and insurance charges is not sustainable and has to be set aside. However, dharmada charges are includible in the assessable value and as such there is no infirmity in the order of Commissioner (Appeals) on this point. - Decision in the cae of CCE vs. Panchmukhi Engg. Works 2002 (11) TMI 122 - SUPREME COURT OF INDIA followed - Decided partly in favour of assessee.

Summary

Issues involved:
Assessable value of goods - Inclusion of dharmada charges, insurance charges, and freight charges.

Analysis:
1. The appellant, a manufacturer of Paper and Paper Board, was in dispute with the Department regarding the inclusion of various charges in the assessable value of goods from March 2000 to June 2001. The charges in question were dharmada charges, insurance charges, and freight charges, which were being recovered by issuing debit notes to customers. The Department contended that these charges should be included in the assessable value, leading to two show cause notices for short paid excise duty.

2. The appellant argued that transit insurance and freight charges should not be included in the assessable value. They cited specific provisions and judgments to support their claim. They highlighted that even though these charges were not mentioned in the invoices, they were separately charged through debit notes, thus meeting the requirement of separate charging. They also argued that dharmada charges should not be included based on previous tribunal and court judgments.

3. The Department defended the inclusion of charges in the assessable value, referring to specific judgments that supported their position. They emphasized that dharmada charges were held to be includible in the assessable value by the Apex Court in previous cases.

4. The Tribunal analyzed the arguments from both sides and reviewed the records. Regarding freight and insurance charges, the Tribunal found that since the sales were at the factory gate, these charges should not be included in the assessable value. The separate charging of these amounts through debit notes was considered sufficient. However, concerning dharmada charges, the Tribunal noted the conflicting judgments but ultimately upheld the inclusion of dharmada charges in the assessable value based on the Apex Court's final view.

5. Consequently, the Tribunal set aside the duty demand on transit insurance and freight charges but upheld the duty demand on dharmada charges. The appeal was partly allowed based on the above analysis.