2018 (9) TMI 165 - AT - Central Excise

Demand alongwith penalties - it was alleged that appellant have recovered certain freight amount which was not shown in their invoices - Held that - There is not dispute about the head under which the said amounts were recovered by the appellant from their customers. The amount has undisputedly being recovered as charges for return of empty truck from buyer s premises which has no relation with the manufacturing activity. Moreover being freight charges they are not includable in the assessable value as held by Hon ble Apex Court in the case of Ispat Industries 2015 (10) TMI 613 - SUPREME COURT - appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of demand and imposition of penalties regarding the recovery of certain freight amount not shown in invoices.

Analysis:
The appellant, M.s Gokulanand Petrofibres, filed appeals against the confirmation of demand and penalties imposed due to the alleged recovery of a freight amount not reflected in their invoices. The appellant's counsel argued that the freight amount in question, which was not included in the invoices but shown in the balance sheet, pertained to charges for returning empty vehicles from the buyer's premises. It was contended that these freight charges should not be considered as part of the assessable value, citing the decision of the Hon’ble Apex Court in the case of Ispat Industries (2015). The argument emphasized that these charges for returning empty vehicles were unrelated to the manufacturing process and should not be included in the assessable value of goods.

The Assistant Commissioner (AR) relied on the impugned order and cited several decisions in support of the respondent's position, including Tripty Drinks Pvt. Ltd. vs. C.C.E., Bhubaneshwar-I (2002), Tripty Drinks Pvt. Ltd. vs. Commissioner (2003), and Saraswati Air Products Ltd. vs. CCE, Meerut (2009). However, upon reviewing the submissions from both parties, the Tribunal found that the recovered amounts were for returning empty trucks from the buyer's premises and were not related to the manufacturing activity. Furthermore, as these charges were essentially freight charges, they were not to be included in the assessable value, in line with the precedent set by the Hon’ble Apex Court in the case of Ispat Industries. The Tribunal noted that the decisions cited by the AR were from a period prior to the Ispat Industries case and therefore did not hold relevance anymore. Consequently, the appeals were allowed, and the decision was pronounced in open court on 01.08.2018.