2017 (1) TMI 596 - AT - Central Excise

Valuation - the differential excise duty was demanded on the amount of transportation only on the ground that the same was not mentioned in the invoice whereas the transportation was recovered through debit notes - whether transportation charges incurred towards the supply of their excisable goods to be included in assessable value? Held that - though as per the procedure, the amount of transportation should be shown in the invoice however the objective of showing in the invoices to identify the amount of transportation for allowing the deduction thereof. Therefore whether it is shown on the invoice or if it is recovered by way of debit notes, in our view both are one and the same - Merely because the transportation was recovered by way of debit note, the same should not be disallowed as deduction for the purpose of charging the duty from the assessable value - transportation not chargeable to duty - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Demand of differential duty on transportation charges recovered through debit notes.
- Inclusion of transportation charges in assessable value for excise duty.
- Appeal against Order-in-Original regarding excise duty.

Analysis:
The case involved the appellant engaged in manufacturing excisable goods under chapter 84 & 85 of the Central Excise Tariff Act, 1985. The demand for a differential duty of &8377;24,872 was confirmed for a specific period, along with interest and penalty, as transportation charges were recovered through debit notes issued to customers. The contention was that if transportation charges were not mentioned in the invoice, they should be included in the assessable value for excise duty. The Commissioner (Appeals) upheld the Order-in-Original, leading the appellant to appeal before the Tribunal.

Upon review, the Tribunal noted that the excise duty was demanded solely because transportation charges were not detailed in the invoice, despite being recovered through debit notes. The Tribunal emphasized that the purpose of showing transportation charges in the invoice was for identification and deduction, and whether shown in the invoice or recovered through debit notes, both methods were equivalent. Therefore, the Tribunal concluded that the transportation charges, even if recovered via debit notes, should not be disallowed as a deduction for duty calculation from the assessable value. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.

The judgment, pronounced on 19/12/2016 by the Tribunal, clarified the treatment of transportation charges in excise duty calculations, emphasizing that the method of recovery, whether through invoice or debit notes, should not impact the allowability of deductions. This decision provides clarity on the inclusion of transportation charges in the assessable value for excise duty purposes, ensuring a fair application of tax regulations in similar cases.