2017 (2) TMI 888 - AT - Central Excise

Valuation - inclusion of freight charges in the assessable value - freight recoveries - Held that - The appellant is liable to duty on the actual usage of returning trucks which needs ascertainment - On the issue of freight recoveries, appellant is directed to submit particulars of freight recovered and freight paid to assessing officer who will restrict the enhancement of assessable value to the difference, if any - appeal disposed off - matter on remand.

Summary

Issues:
- Recovery of freight charges for goods transported from distribution location to factory
- Inclusion of notional costs in assessable value
- Enhancement of assessable value based on contract price with bulk purchasers

Recovery of Freight Charges:
The appellant, a manufacturer of yeast products, challenged the demand for recovery of freight attributed to goods transported from distribution location to the factory. The appellant claimed that the recoveries of freight from customers were less than the actual amount expended. The tribunal observed that the recovery of excess freight should be evidenced by the appellant to match the actual freight incurred. The tribunal held that notional costs, including the use of returning empty trucks, should be included in the assessable value unless proved otherwise. The assessing authority was directed to compute the actual recovery after ascertaining the freight attributable to trips used for carriage of goods belonging to the appellant.

Inclusion of Notional Costs in Assessable Value:
The appellant contended that the demand for the period from 1988 to 1993 was not liable to be recovered under the Central Excise Act. The tribunal noted that the appellant's claim of recoveries being less than the amount expended was not supported by evidence. The tribunal held that notional costs attributable to unsold stock, even if not incurred, should be added to the assessable value. Additionally, any excess recovery of freight by the appellant was deemed as additional consideration for sale unless proven otherwise. The tribunal directed the assessing authority to include these components in the assessable value.

Enhancement of Assessable Value based on Contract Price:
The appellant challenged the enhancement of the assessable value to conform to the price charged from one of the bulk purchasers. The tribunal found that the appellant had provided justification for the difference in price based on unique contracts with the purchasers. The tribunal held that the contract prices, as declared in price lists, should be accepted as the assessable value. The tribunal emphasized that the Central Excise Act or Rules did not prescribe a specific form of contract as acceptable. The appellant was held liable for excise duty on the actual usage of returning trucks and directed to submit particulars of freight recovered for assessment.

Conclusion:
The tribunal dismissed the appellant's contention regarding the bar of limitation and held them liable for duty on the actual usage of returning trucks and excess recovered freight. The assessing officer was instructed to restrict the enhancement of the assessable value based on the difference between freight recovered and freight paid. The appeal was disposed of with modifications to the impugned order.