2014 (12) TMI 908 - AT - Central Excise

Valuation of goods - Inclusion of outward freight charges - Held that - Show Cause Notice does not allege, either expressly or by implication that outward freight charges were separately collected by the appellant. There is also no evidence, oral or documentary on the record to facilitate a finding as to additional collection of outward freight by the appellant. The appellant clearly, specifically and categorically pleaded in response to the Show Cause Notice that since the sales were on FOR destination basis, the transaction value includes the value of freight and that the freight charges were not separately collected from the buyers and further that the amount of transportation charges paid by the appellant were disclosed in its books of account under the head of expenditure. Neither the primary nor the appellate Authority adverted to any evidence whatsoever, documentary or oral, on the basis of which the primary authority perversely in para 17; and the appellate Authority in the impugned order affirmed, that the appellant was required to include the value of transportation charges in addition to the transaction value, on which duty was paid. Neither the primary nor the appellate orders adverted to any evidence on record to justify this perverse conclusion (based on no evidence), concurrently recorded. - Decided in favour of assessee.

Summary

Issues:
- Inclusion of outward freight in the assessable value for excise duty calculation.

Analysis:
- The case involved an appeal by a registrant under the Central Excise Act, 1944, who was a manufacturer of excisable goods, specifically primary cells and primary batteries.
- The appellant received a Show Cause Notice alleging that outward freight charges were not included in the assessable value for excise duty calculation, leading to a demand for additional duty, penalty, and interest.
- The appellant contended that outward freight was indeed included in the assessable value, and no additional consideration was received from buyers, thus challenging the demand.
- The primary authority confirmed the demand, stating that the appellant collected more than the amount included in the assessable value, but failed to provide evidence supporting this claim.
- The appellate authority upheld the decision, citing lack of evidence from the appellant to prove that outward freight charges were not separately collected from buyers.
- The burden of proof was incorrectly placed on the appellant to show non-collection of outward freight charges, which was deemed fallacious as per legal principles.
- The conclusion of the primary authority was considered baseless and unsupported by evidence, leading to the appeal being allowed, and the impugned order quashed with costs imposed on the respondent due to the avoidable nature of the appeal.

This detailed analysis highlights the key legal issues surrounding the inclusion of outward freight in the assessable value for excise duty calculation, the burden of proof, and the lack of evidence supporting the claims made by the revenue authorities. The judgment emphasizes the importance of proper pleading and evidence in tax matters and clarifies the correct allocation of the burden of proof in such cases.