2017 (12) TMI 1145 - AT - Central Excise

Valuation - includibility - transportation/ freight charges - Held that - even though it is not shown in the excise invoice but by raising the commercial invoice the freight amount has been separated from the total sale value, therefore irrespective of the fact that whether it is shown separately in the excise invoice or it is charged separately in the commercial invoice, it is one and the same thing - only due to non-inclusion of freight amount in the excise invoice the same cannot be included in the assessable value - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
- Interpretation of Rule 5 of Central Excise Valuation Rules, 2000 regarding inclusion of freight charges in assessable value.
- Dispute over whether non-inclusion of freight amount in the excise invoice affects the assessable value.
- Applicability of various judgments on the issue.

Analysis:

1. Interpretation of Rule 5 of Central Excise Valuation Rules, 2000: The case revolved around the appellant raising a commercial invoice for freight and insurance charges to the customer without showing the freight in the central excise invoice. The contention was that this contravened Rule 5 of the Central Excise Valuation Rules. The adjudicating authority concluded that irrespective of the price being at the factory gate or for delivery elsewhere, the freight charges are deductible under Rule 5 if shown separately in the invoice. The authority emphasized that the exclusion of freight under Rule 5 cannot be denied solely due to non-inclusion on the invoice.

2. Impact of Non-Inclusion of Freight Charges: The revenue sought to demand duty on the freight charges not shown in the excise invoice. However, it was noted that by raising a separate commercial invoice for the freight amount, it was effectively separated from the total sale value. The Tribunal emphasized that whether the freight is shown in the excise invoice or charged separately in the commercial invoice, it remains the same. The Tribunal viewed the non-inclusion in the excise invoice as a procedural lapse, stating that such minor procedural issues should not alter the substantial valuation governed by Section 4 read with Rule 5 of the Central Excise Valuation Rules 2000.

3. Applicability of Precedents: The Tribunal referenced several judgments, including UOI Vs. Bombay Tyre International, Associated Strips Vs. CCE, Goa Paints Allied Products, Escorts JCB, and National Heavy Engg Co-op Ltd. These judgments supported the position that non-inclusion of the freight amount in the excise invoice does not warrant its inclusion in the assessable value. The Tribunal, based on these precedents, concluded that the order of the adjudicating authority was legally sound and should not have been interfered with by the Commissioner. Consequently, the impugned order was set aside, and the appeal was allowed.

This detailed analysis of the judgment highlights the key legal issues, the Tribunal's interpretation of relevant rules, the impact of non-inclusion of freight charges on assessable value, and the application of legal precedents to reach a decision.