2004 (12) TMI 265 - AT - Central Excise

Summary

Issues involved:
1. Inclusion of collected amounts in assessable value under the guise of freight.
2. Interpretation of Section 4(1)(a) of the CE Rules regarding transportation charges.
3. Application of relevant case laws in determining assessable value.

Detailed analysis:
1. The appeal before the Appellate Tribunal CESTAT, Bangalore arose from OIA No. 37/2004 dated 26-3-2004, concerning the inclusion of certain collected amounts in the assessable value under the guise of freight for the period from 1-7-2000. The appellant contended that the collected amounts were solely for freight related to delivery at the assessee's place and should not be included in the assessable value. They argued that the sale was completed at the factory gate, and the transportation charges were independent of the manufacturing process, aligning with Section 4(1)(a) of the CE Rules. The appellant relied on precedents such as Filament India v. CCE, Jaipur and West Coast Paper Mills Ltd. v. CCE, Bangalore, which emphasized that transportation charges not shown separately in the invoice should not affect the assessable value if actual freight paid has been verified and differential duty paid on excess charges.

2. The department contended that the collected amounts should be included in the assessable value as they were not the actual freight but additional charges. However, the Tribunal noted that the transportation charges collected were at the request of customers and had no nexus to the transaction value under Section 4(1)(a) of the Valuation Rules. Citing the aforementioned case laws, the Tribunal concluded that the excess amount collected as freight charges should not be included in the assessable value when the sale was completed at the factory gate. The impugned order was set aside, allowing the appeal in favor of the appellant.

3. The Tribunal's decision was based on a thorough consideration of the facts, emphasizing that the transportation charges collected were unrelated to the transaction value and should not impact the assessable value. By applying the principles established in prior rulings and interpreting Section 4(1)(a) of the CE Rules, the Tribunal found that the appellant was entitled to exclude the excess freight charges from the assessable value, ultimately ruling in favor of the appellant and setting aside the previous order.