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2024 (6) TMI 373 - AT - Central ExciseValuation of Excise duty - inclusion of freight charges collected by the appellant from the customers in the course of sale of excisable goods, in the assessable value of goods sold for the purpose of Section 4 of Central Excise Act, 1944 - levy of penalty. Whether in case of ex-factory sale the freight charges collected separately over and above the sale price of the goods in the invoice from the customers is includible in the assessable value of the goods? - HELD THAT - It is found that on this issue much water has flown and consistently held by the various decisions of the Tribunal and the landmark judgement of Hon ble Supreme Court in the case of M/S ISPAT INDUSTRIES LTD. that in case of ex-factory sale the freight charges collected from the customers over and above the sale price is not includible in the assessable value. Reliance placed inthe decisions of this Tribunal in the case of Sayaji Senthness Ltd 2024 (5) TMI 194 - CESTAT AHMEDABAD where this Tribunal held ' freight and/or insurance is not includable in the assessable value.' From the above decision it can be seen that this Tribunal considered the various judgements which are also referred by the appellant. Tribunal has decided that the freight charges is not includible in the assessable value. The impugned order is set aside - appeal allowed.
The issues involved in the present case are: (1) whether the freight charges collected by the appellant from the customers in the course of the sale of excisable goods are includible in the assessable value of goods sold for the purpose of Section 4 of the Central Excise Act, 1944, and (2) whether any penalty is imposable on the appellant in the facts and circumstances of the case. Issue 1: Includibility of Freight Charges in Assessable Value The appellant argued that the issue is no longer res-integra as various judgments have consistently held that freight charges are not includible in the assessable value of excisable goods when sold ex-factory. The appellant cited several judgments, including M/s. Ispat Industries Ltd (2015(10) TMI 613-SC) and M/s. IDMC Limited (2023(3) TMI 735-CESTAT Ahm), to support their position. The tribunal examined the records and found that in the case of ex-factory sales, the freight charges collected separately from the customers over and above the sale price are not includible in the assessable value. The tribunal referred to previous decisions, including the landmark judgment of the Hon'ble Supreme Court in M/s. Ispat Industries Ltd., which established that the place of removal is the factory gate and not the buyer's premises. The tribunal also considered the case of Sayaji Senthness Ltd, which reiterated that freight and/or insurance charges shown separately in the invoice are not includible in the assessable value. The tribunal concluded that the freight charges cannot be included in the assessable value in the facts of the present case, and therefore, no demand of duty on freight would sustain. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief. Issue 2: Imposability of Penalty Given that the tribunal found the demand of duty on freight charges to be unsustainable, it logically followed that no penalty could be imposed on the appellant. The tribunal did not specifically address the issue of penalty beyond this logical conclusion. Conclusion The tribunal set aside the impugned orders and allowed the appeals, concluding that freight charges are not includible in the assessable value of excisable goods sold on an ex-factory basis. The decision was based on consistent judicial precedents, including the Hon'ble Supreme Court judgment in M/s. Ispat Industries Ltd. and other tribunal decisions. (Pronounced in the open court on 04.06.2024)
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