2018 (9) TMI 1569 - AT - Central Excise

Valuation - includibility - freight collected in excess of the actual freight incurred by the appellant towards delivery of goods to the buyers place is an additional consideration towards sale of goods - Held that - The issue is no longer res integra as the Hon ble Supreme Court in the case of Baroda Electric Meters Ltd. 1997 (7) TMI 126 - SUPREME COURT OF INDIA held that duty of excise is on manufacture and not a tax on the profits made on transportation - Even after the new Valuation Rules came into force, similar view was expressed in Bathinda Industrial Gases Vs. C.C.E. & S.T., Chandigarh-II 2014 (7) TMI 351 - CESTAT NEW DELHI - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Violation of provisions of Section 4 of the Central Excise Act, 1944 read with Rule 5 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 by not including freight charges in assessable value for duty payment.

Analysis:
The judgment dealt with the issue of whether the freight charges collected over and above the assessable value by the appellant should be included in the assessable value for payment of duty. The Intelligence gathered revealed that the appellant had collected freight charges through commercial invoices but did not include them in the assessable value. The Original Authority confirmed an amount, interest, and imposed a penalty equal to the duty under Section 11AC of the Central Excise Act, 1944. The Commissioner (Appeals) upheld the decision, leading to the appeal.

The appellant argued that they were a small-scale industry engaged in fabrication and delivery of cabinets for a specific client. They contended that the freight charges collected were as per the agreement with the buyer and could vary based on various factors. They relied on precedents to support their claim that transport charges collected separately from customers should not be included in the assessable value.

On the other hand, the Revenue argued that only the actual cost of transportation should be excluded from the assessable value, and any amount received above that should be included. The Tribunal referred to the Supreme Court's ruling in a similar case and the Central Excise Valuation Rules, stating that duty is on manufacture, not profits from transportation. They concluded that the demand needed to be set aside, and the impugned order was overturned. The appeal was allowed with consequential reliefs.

In conclusion, the judgment clarified the treatment of freight charges in the assessable value for duty payment, emphasizing that only the actual cost of transportation should be excluded. The decision was based on legal provisions, precedents, and the distinction between duty on manufacture and profits from transportation.