2016 (1) TMI 1054 - AT - Central Excise

Recovery of transport charges separately by way of debit notes - whether amount to declaring transport charges separately or not? - Held that - In view of the admitted fact that the appellant assessee have recovered transport charges by separate transport bills/debit notes, which is of even date as the date of invoice and all other details given in the debit notes like, place of delivery, name of the party, name of the goods, quantity etc. can be correlated to the excise invoice, we hold that the same is to be read together with Excise invoice and in the facts, we hold that the assessee have separately displayed the transport charges. In this view of the matter, learned Commissioner (Appeals) has erred in holding that the transport charges are includible in the transaction value. We further hold that the includability of transport charges arise only in the case when transport charges are included in the sale of the goods. Accordingly, we allow the appeal with consequential benefit. The impugned order is set aside.

Summary

Issues:
1. Whether recovery of transport charges separately by way of debit notes amounts to declaring transport charges separately or not?

Analysis:
The appellant, a manufacturer of Sugar, Molasses, and organic chemicals, appealed against an Order-in-Appeal passed by the Commissioner of Central Excise. The issue revolved around the recovery of transport charges separately through debit notes. The Revenue contended that these charges should be included in the assessable value as per Rule 5 of the Central Excise Valuation Rules, 2000, and a show-cause notice was issued for short payment of duty. The appellant raised separate transport bills bearing details corresponding to the Central Excise Invoice. The Order-in-Original confirmed the demands, but the Commissioner (Appeals) held that transport charges recovered separately are includible in the transaction value for duty payment purposes.

The appellant argued that identical goods sold at the same price without transportation did not warrant additional charges. They maintained that the recovery of transport charges through separate bills fulfilled the Rules' requirements and should not be added to the transaction value. The appellant also highlighted the legislative changes regarding the place of removal and the absence of any depot. Citing precedents like Commissioner of Central Excise, Nashik vs. Garware Enterprises Ltd., the appellant contended that transport charges should not be included in the transaction value as per Rule 5 of the Valuation Rules.

The Revenue, however, supported the inclusion of transport charges in the transaction value, citing the case law Commissioner of Central Excise, Aurangabad vs. Roofit Industries Ltd., where the Supreme Court emphasized the inclusion of various charges in the transaction value. They also referenced another Supreme Court ruling in Commissioner of Central Excise, Mumbai III vs. M/s. Emco Ltd., which highlighted the inclusion of transport charges and insurance risk in the sale price.

After considering the arguments, the Tribunal held that the appellant had displayed transport charges separately through debit notes, correlating with the excise invoice details. Therefore, the Tribunal concluded that the transport charges should not be included in the transaction value unless explicitly included in the sale of goods. Consequently, the appeal was allowed, and the impugned order was set aside, granting the appellant consequential benefits.