2018 (10) TMI 688 - AT - Central Excise

Valuation - handling charges collected @ 1% of the value as a part of the transaction cost, whether forms part of transaction value or not? - Held that - The cost of transportation from the place of removal up to the place of delivery of such goods is not includible in the assessable value under Section 4 of the Central Excise Act, 1944 and not chargeable to Central Excise duty under Section 3 of the Act. In the instant case, the appellant has claimed the handling charges of 1% of the value as part of the transportation cost. Therefore, it is not includible in the assessable value - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against Order-in-Appeal No. 13/2007 dated 10-1-2007.
- Inclusion of handling charges in assessable value for Central Excise duty.

Analysis:
The appeal before the Appellate Tribunal CESTAT Bangalore was filed against Order-in-Appeal No. 13/2007 dated 10-1-2007. The appellant, a manufacturer of leaf springs attracting Central Excise duty, had been demanded duty and penalty under Section 11AC of the Central Excise Act, 1944, for including handling charges in the transaction cost. The appellant had shown handling charges collected at 1% of the value as part of the transaction cost through separate bills. The Department contended that these charges should be subject to duty. The Tribunal noted that transportation costs from the place of removal to the place of delivery are not includible in the assessable value under Section 4 of the Central Excise Act, 1944, and are not chargeable to Central Excise duty under Section 3 of the Act.

The Tribunal observed that the appellant had claimed the handling charges of 1% of the value as part of the transportation cost. As per the law, such charges are not includible in the assessable value for Central Excise duty. Therefore, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant. The decision was based on the understanding that handling charges, being a part of transportation cost, are not to be included in the assessable value for the purpose of Central Excise duty. The judgment provided clarity on the treatment of handling charges in relation to Central Excise duty, ensuring compliance with the relevant provisions of the Central Excise Act, 1944. The ruling highlighted the importance of correctly determining the assessable value for duty calculation purposes, emphasizing the specific exclusions provided under the law.