2018 (5) TMI 1108 - AT - Central Excise

Valuation - inclusion of expenses on transportation of goods manufactured by them from factory to the sales depot - Held that - It is very simple concept of transaction value that the expenditure incurred by the manufacturer is not the additional consideration and that, if an additional amount in addition to the transaction value is received from the buyer by the manufacturer then such amount is treated as additional consideration and only such amount qualifies for demand of differential Central Excise duty - amount need not be included in the assessable value - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether transportation expenses should be added to the assessable value for the payment of Central Excise duty.

Analysis:
The judgment by the Appellate Tribunal CESTAT ALLAHABAD dealt with three appeals arising from different impugned orders but concerning the same issue and appellants, thus consolidated for decision. The appellants, engaged in manufacturing Polyurethane, faced demands for differential Central Excise duty totaling &8377;4,31,40,066 due to transportation expenses incurred from factory to sales depot. The Revenue contended that these expenses should be added to the assessable value. The appellants argued that the expenses were not additional consideration for Central Excise duty payment. The authorities below rejected the appellants' contentions, leading to the appeals before the Tribunal.

The Learned Counsel for the Appellants referred to a specific show cause notice highlighting the transportation expenditure issue and cited a precedent involving Eveready Industries India Ltd. vs. CCE, Noida to support their case. On the other hand, the Learned A.R. supported the impugned orders. After considering the arguments and examining the records, the Tribunal concluded that the Revenue misunderstood the concept of additional consideration. The Tribunal clarified that expenditure incurred by the manufacturer on raw materials and transportation is not additional consideration. Only an amount received in addition to the transaction value qualifies as additional consideration for demanding differential Central Excise duty. Citing the precedent mentioned earlier, the Tribunal held that the demands in the show cause notices were unsustainable, amounting to &8377;4,31,40,066. Consequently, the Tribunal set aside all impugned orders and allowed the appeals, entitling the appellants to consequential relief as per law.