2019 (1) TMI 494 - AT - Central Excise

Valuation - inclusion of profit earned on transportation charges in assessable value - Held that - The respondent has shown transportation charges separately in the invoices - Moreover, the said PCC Poles have been transported by the respondent in their own vehicle and due to transportation in their own vehicle, the respondent has earned the profit on account of transportation of the goods. The said profit eared by the respondent is not includable in the assessable value of the goods as held by this Tribunal in the case of M/s Associated Strips Limited 2017 (11) TMI 1244 - CESTAT CHANDIGARH . The transportation charges are not includable in the assessable value of the goods as freight charges are separately shown by the respondent - Appeal dismissed - decided against Revenue.

Summary

Issues:
The issue involves the under valuation of goods on account of profit earned on transportation charges and whether the transportation charges are includable in the assessable value of the goods supplied.

Analysis:
The case revolved around the respondent, a manufacturer of PCC Poles and Beams, who entered into an agreement for supply with a utility company. The dispute arose when it was alleged that the respondent undervalued the assessable value of the goods supplied by charging higher freight charges than the actual expenses incurred on transportation. The Revenue initiated proceedings against the respondent, claiming that the transportation charges should be included in the assessable value, leading to a demand for a differential amount of duty. Both lower authorities dropped the demands, prompting the Revenue to appeal.

The Revenue argued that the transportation charges, being higher than the actual expenses, should be included in the assessable value. On the other hand, the respondent contended that the profit earned on transportation charges, as the goods were transported in their own vehicles, should not be included in the assessable value. The respondent relied on a precedent where it was held that excess freight collected from customers, exceeding actual expenses, should not be included in the assessable value.

After hearing both sides, the Tribunal examined the invoices showing transportation charges separately and noted that the respondent transported the goods in their own vehicles, earning a profit. Citing previous decisions and Supreme Court judgments, the Tribunal concluded that the profit earned on transportation charges should not be included in the assessable value. The Tribunal upheld the impugned order, stating that since the freight charges were separately shown, there was no infirmity in the decision. Consequently, the appeal filed by the Revenue was dismissed.

In summary, the Tribunal held that transportation charges, when separately shown and involving profit earned by the respondent, should not be included in the assessable value of the goods supplied. The decision was based on established legal principles and precedents, ultimately leading to the dismissal of the Revenue's appeal.