2017 (6) TMI 713 - AT - Central Excise

Valuation - whether the appellant is entitled for the deduction of secondary freight incurred by them from their depot to the place of delivery charged as equated (average secondary freight) in the determination of assessable value covering the period from 1.7.2000 to 31.3.2003? - Held that - it is seen that the freight amount mentioned in the invoice are equated freight calculated at a particular pattern or system of pricing. They have also produced the certificate of the Chartered Accountant. It is not practically possible for the appellant to have the equated freight showing separately in the invoices. In the case of Commissioner of Central Excise Vs. Laxmi Engineering 2004 (10) TMI 426 - CESTAT, NEW DELHI , a similar view was taken for the transportation cost incurred by the assessee from the place of removal to the place of delivery is not to be included in determining the assessable value. Demand set aside - appeal allowed - decided in favor of appellant.

Issues:
Whether the appellant is entitled to the deduction of secondary freight incurred by them from their depot to the place of delivery in the determination of assessable value covering the period from 1.7.2000 to 31.3.2003.

Analysis:
The case involved a dispute regarding the deduction of secondary freight by the appellant in the determination of assessable value under Rule 5 of Central Excise (Valuation) Rules, 2000. The original authority confirmed duty liability against the appellant, which was upheld by the Commissioner (Appeals). The Tribunal remanded the matter for fresh decision to allow the appellant to produce evidence regarding the secondary freight charged to buyers. In the subsequent adjudication, the duty demand was confirmed as the appellant failed to show the quantum of secondary freight separately charged to the buyer. The appellant contended that the freight was averaged and it was impossible to prove the actual cost of transportation. The appellant argued that as per Section 4 of the Act, the assessable value should exclude transportation costs beyond the place of removal. The appellant relied on a Tribunal decision in a similar case in favor of the assessee.

The appellant's counsel argued that the Chartered Accountant's certificate had certified the secondary freight as equated freight, and the authorities should have considered this. The appellant maintained that it was not feasible to separately show equated freight in the invoices. The Tribunal noted that the freight amounts mentioned were calculated on a specific pattern or system of pricing and that the Chartered Accountant's certificate supported this. Referring to previous Tribunal decisions, the Tribunal held that during the relevant period, exclusion of averaged freight from the assessable value could be allowed even when there was no specific provision for it. The Tribunal emphasized that the exclusion of transportation cost from the place of removal to the place of delivery was permissible, even if charged on an averaged basis. Citing relevant case law, the Tribunal concluded that the demand was unsustainable, set aside the impugned orders, and allowed the appeal with consequential relief.

In conclusion, the Tribunal found in favor of the appellant, allowing the deduction of secondary freight incurred by them from their depot to the place of delivery in the determination of assessable value. The Tribunal emphasized the practical difficulties in separately showing equated freight in the invoices and relied on legal principles to support the appellant's position. The Tribunal's decision was based on a thorough analysis of the evidence presented and relevant legal precedents.

← Previous Next →