2016 (10) TMI 231 - AT - Central Excise

Valuation - Demand of differential duty - freight charged for transportation of explosives to various coal fields - whether transportation charges need to be included in the assessable value to demand differential duty? - Held that - the provisions of Rule 5 of Central Excise Valuation Rules 2000, are directly applicable, wherein it is provided that the transport cost need not to be included in the assessable value if it is billed on the invoice and collected. The respondent had not billed for more transportation charges than actually paid by them. In the absence of contrary evidence indicating that the respondent collected excess freight, it is held that the provisions of Rule 5 of Central Excise Rules complied with and the excess of transportation charges need not to be included in the assessable value for discharge of additional excess duty - appeal rejected - decided against Revenue.

Summary

Issues:
- Demand of differential duty on transportation charges for explosives to coal fields
- Applicability of Rule 5 of Central Excise Valuation Rules, 2000

Analysis:
1. The appeal before the Appellate Tribunal CESTAT MUMBAI involved a dispute over the demand of differential duty on transportation charges for explosives to coal fields. The Revenue contended that duty liability arises on transportation charges collected by the respondent for both outward and return journeys. The adjudicating authority upheld the demand, but the first appellate authority set it aside.
2. The Revenue argued that duty liability arises on transporting explosives from the factory to coal fields, citing a Board's Circular and contractual terms. The respondent, however, relied on a Supreme Court judgment and Rule 5 of Central Excise Valuation Rules, 2000, to support their position that freight charges should not be included in the assessable value.
3. The Tribunal found the Revenue's case lacking merit for the period in question (July 2000 to June 2004). The transaction value between the respondent and coal fields was contractually determined, with transportation costs clearly indicated separately on invoices. The Tribunal noted that Rule 5 exempts transport costs from assessable value if billed and collected, provided there is no evidence of overbilling. As there was no proof of excess freight collection, the Tribunal upheld the application of Rule 5 and rejected the appeal.
4. In conclusion, the Tribunal dismissed the appeal, emphasizing compliance with Rule 5 of Central Excise Valuation Rules, 2000, and the absence of evidence supporting the Revenue's claim of excessive freight charges.