2024 (1) TMI 243 - AT - Central Excise

Valuation of Excise Duty - excess freight collected by the appellant from their customers as compared to actual freight paid to the transporter is liable to be included in the assessable value for discharging the excise duty or not - HELD THAT - As regard the dutiability of excess freight collected from the customers as compared to the actual freight paid to the transporter, the Hon ble Supreme Court in the case of BARODA ELECTRIC METERS LTD. VERSUS COLLECTOR OF CENTRAL EXCISE 1997 (7) TMI 126 - SC ORDER held that the difference is on account of profit against the transportation charges and not the profit against the sale of goods and accordingly held that the differential freight amount is not liable to excise duty. The impugned order set aside - appeal allowed.

Summary

Issues involved: Determination of whether excess freight collected by the appellant from customers, compared to actual freight paid to transporter, should be included in assessable value for discharging excise duty.

Summary:

Issue 1: Excess freight inclusion in assessable value

The Hon'ble Tribunal, comprising of Mr. Ramesh Nair and Mr. Raju, deliberated on the question of whether the excess freight collected by the appellant from their customers, in comparison to the actual freight paid to the transporter, should be considered for determining the assessable value for excise duty. The appellant's counsel, Shri S.J Vyas, contended that this issue has been settled in previous judgments such as Baroda Electric Meters Ltd, Jai Mata Glass Ltd, Sri Kaliswari Fireworks, Neha Powerlines Pvt Ltd, U.P Twiga Fiberglass Ltd, M/s. Madhu Tex Industries Ltd, Messers Mira Industries, and others. The Revenue, represented by Shri A R Kanani, reiterated the findings of the impugned order.

The Tribunal carefully analyzed the submissions from both sides and reviewed the relevant records. Referring to the decision of the Hon'ble Supreme Court in the case of Baroda Electric Meters Ltd, it was established that the excess freight collected did not pertain to profit from the sale of goods but rather profit against transportation charges. Following the Supreme Court's ruling, it was concluded that the differential freight amount is not subject to excise duty. This position had been consistently upheld in various subsequent decisions as cited by the appellant. Consequently, the Tribunal found that the issue was no longer open to debate and set aside the impugned order, thereby allowing the appeal.

The judgment was pronounced in open court on 15.12.2023.