2012 (1) TMI 124 - AT - Central Excise

Duty demand - forwarding charges - Held that - Most of the period relevant for deciding the case falls after 1-3-2003, as per this rule cost of transportation from place of removal to place of delivery does not form part of value. If such charges are recovered on averaged basis cost as arrived at by accepted principles of accounting is allowed to be deducted. Even for previous periods C.B.E. & C. has clarified vide Circular dated 30-6-2002 that such charges on averaged basis could be excluded of ascertained properly - photocopies of bills of carriers, who had transported the goods from factory to the godown of the transporters agency to do the final leg of the transportation to the buyer s premises. This is seen recorded in para 4(1) of the adjudication order dated 20-10-2005. This submission is rejected on the ground that invoice shows that the goods were delivered at the factory gate but still the appellants collected forwarding charges. There is no finding that the charges recovered as forwarding charges were for in excess of what was recovered. The decisions quoted by Revenue were given for the reason that the assessee did not produce evidence to show that forwarding charges were in fact transportation charges - Decided in favour of assessee.

Summary

Issues:
- Whether the forwarding charges collected by the appellant form part of the assessable value for excise duty calculation.
- Applicability of Rule 5 of the Central Excise Valuation Rules.
- Interpretation of the amendments to Rule 5 post-1-3-2003 regarding transportation costs.
- Admissibility of evidence regarding transportation charges collected by the appellant.

Analysis:

Issue 1:
The Revenue contended that the forwarding charges collected by the appellant should be considered as part of the assessable value for excise duty calculation. The appellant argued that these charges were for transportation from the factory to the transporter's godown and should not be included in the assessable value. The Commissioner (Appeals) provided some relief, but the appellants were still aggrieved and filed further appeals.

Issue 2:
The Revenue relied on Rule 5 of the Central Excise Valuation Rules, which stipulated that if the cost of transportation is charged to the buyer in addition to the price for the goods and shown separately in the invoice, it should be excluded from the assessable value. The Revenue argued that since the appellants did not indicate the actual freight separately, these amounts should be included in the assessable value.

Issue 3:
The Tribunal analyzed the amended Rule 5 post-1-3-2003, which clarified that the cost of transportation from the place of removal to the place of delivery should be excluded from the value of excisable goods. The rule also allowed for the deduction of transportation costs calculated based on accepted principles of costing. The Tribunal noted that for the relevant period falling after 1-3-2003, such transportation costs did not form part of the value.

Issue 4:
The appellant submitted photocopies of bills of carriers to support their argument that the charges collected were for transportation from the factory to the transporter's godown. However, the submission was rejected based on the grounds that the invoice indicated delivery at the factory gate. The Tribunal found no merit in the Revenue's argument that the charges should form part of the value and sided with the appellant, allowing the appeal with consequential benefits.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that the transportation charges collected were for the transportation from the factory to the transporter's godown and should not be considered part of the assessable value for excise duty calculation. The Tribunal also highlighted the amendments to Rule 5 post-1-3-2003, which clarified the treatment of transportation costs in the valuation of excisable goods.