2018 (12) TMI 1024 - AT - Central Excise

Valuation - inclusion of fix freight amount recovered from the outlets in assessable value - case of Revenue is that thses amount are not includible since these charges are not the actual transportation cost, but it is in the form of a fixed charge which is realized by the appellant - Held that - This issue has been considered by the Tribunal in the Appellant s own case INDIAN OIL CORPORATION LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PATNA 2007 (5) TMI 501 - CESTAT, KOLKATA , where it was held that the amounts recovered by the appellant were only towards the transportation charges and the same cannot be included in the assessable value - appeal allowed - decided in favor of appellant.

Summary

Issues: Valuation of petroleum products for duty payment including Free Delivery Zone (FDZ) charges.

Analysis:
The appeal concerns the valuation of petroleum products cleared by the appellant for sale, specifically focusing on whether charges labeled as Free Delivery Zone (FDZ) charges should be included in the assessable value for duty payment. The appellant sold goods to their retail outlets within 39 Kms from the supply point, recovering a fixed amount as freight. The Department contended that these charges should be part of the assessable value as they were not actual transportation costs but fixed charges realized by the appellant. A Show Cause Notice was issued for the period in question, leading to the confirmation of the duty demand, interest, and penalty by the Adjudicating Authority. The appellant challenged this decision, arguing that the recovered amounts were solely for transportation and should not be included in the assessable value. They cited a previous Tribunal decision in their favor and emphasized that the issue in the Show Cause Notice was limited to the recovery of the fixed amount for delivery under FDZ. The Adjudicating Authority's consideration of extraneous charges not mentioned in the notice was also highlighted by the appellant.

The Tribunal analyzed the issue based on the appellant's previous case and found that the charges in question were allowed by the Oil Coordination Committee at a specific rate, even though the actual cost was higher. The Tribunal noted that the Valuation Rules permitted the deduction of actual transportation costs from the assessable value, and since the appellant had charged an amount below the actual cost, adding the fixed amount to the assessable value was deemed incorrect. The Tribunal observed that the invoices clearly showed the transportation charges separately, and there was no justification for including the fixed amount in the assessable value. Consequently, the Tribunal set aside the impugned order, following its previous decision in the appellant's favor. The appeal was allowed, and the impugned order was rejected.