2016 (1) TMI 154 - AT - Central Excise

Valuation - whether the substantive benefit of exclusion of transportation charges to arrive at the assessable value - Held that - The appellant has shown the contract/purchase order with the railways which indicate freight charges as ₹ 3/- per liter. The corresponding excise invoice does not indicate the freight charges but for each consignment there is a corresponding GR which indicates the freight amount. Further, a separate commercial invoice is raised for freight corresponding to the purchase order. This commercial invoice indicates the value and freight amount separately. We find all these documents tallying in respect of a particular consignment. Only because the freight amount was not indicated separately in the excise invoice, although it is clearly reflected in the commercial invoice and GR, is not sufficient ground to deny the substantive benefit. The law does not require charging of duty on freight for technical lapse of not indicating the freight charges separately on the excise invoice. Reliance is placed on the judgments in the case of West Coast Paper Mills Ltd. v. CCE 2004 (7) TMI 150 - CESTAT, BANGALORE and Goodyear India Ltd. v. CCE 2014 (6) TMI 682 - CESTAT NEW DELHI - Impugned order is set aside - Decided in favour of assessee.

Summary

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

Analysis:
The case involved a dispute regarding the inclusion of freight charges in the assessable value for excise duty calculation by the appellant, a manufacturer of paints and varnishes. The appellant collected freight charges from buyers without incorporating them in the invoices during a specific period. The Revenue argued that the freight charges should be included in the assessable value as per Section 4 of the Central Excise Act, 1944 read with Rule 5 of the Central Excise Valuation Rules. The Dy. Commissioner and the Commissioner (Appeals) upheld this view, leading to the appellant filing an appeal against the Commissioner (Appeals) order.

The law governing the matter was Section 4(1)(a) of the Central Excise Act, which states that excise duty is chargeable on excisable goods with reference to their value. The Commissioner (Appeals) determined that the sale occurred at the time of removal of goods from the factory, a finding not challenged by the Revenue. This led to the application of Rule 5, which allows exclusion of transportation charges from the assessable value if charged separately to the buyer and shown in the invoice.

The critical issue to address was whether the exclusion of transportation charges to determine the assessable value should be allowed. The appellant provided evidence of separate documentation for freight charges, such as purchase orders, commercial invoices, and GRs, even though the excise invoices did not explicitly mention the freight charges. The Tribunal found that the substantive benefit of excluding transportation charges should be allowed, as technical lapses in not indicating freight charges separately on the excise invoice should not lead to duty imposition. The Tribunal cited precedents like West Coast Paper Mills Ltd. and Goodyear India Ltd. to support this conclusion.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, ruling in favor of the appellant regarding the exclusion of freight charges from the assessable value for excise duty calculation.