2024 (6) TMI 843 - AT - Central Excise

Valuation - excess freight collected as compared to the actual freight paid to the transporter is includable in the assessable value of the excisable goods or not - HELD THAT - The identical issue has been considered in catena of judgments, particularly based on the Hon ble Supreme Court Judgment in the case of Baroda Electric Meter Ltd 1997 (7) TMI 126 - SC ORDER where it was held that ' The Tribunal accepted the position that equalised freight was charged by the appellant from everyone, but proceeded to say that even though freight cannot be a part of the assessable value that wherever freight actually paid was less than the amount collected by way of freight and transportation charges the difference was appropriated by the appellant and, therefore, the same would be a part of the assessable value.' The excess freight recovered by the appellant from the customer as compared to the actual freight on account of transportation shall not include in the assessable value for the purpose valuation of excisable goods. The impugned order is set aside - Appeal allowed.

Summary

Issues: Whether excess freight collected should be included in the assessable value of excisable goods.

Analysis:
The judgment by the Appellate Tribunal CESTAT Ahmedabad delves into the issue of whether excess freight collected should form part of the assessable value of excisable goods. The appellant argued that this issue has been settled by the Supreme Court in the case of Baroda Electric Meter Ltd v. CCE 1997 (94) ELT 13 (SC), and subsequent decisions by the Tribunal. The Revenue, represented by the Superintendent, reiterated the findings of the impugned order.

Upon careful consideration, the Tribunal referred to the precedent set by the Supreme Court in the case of Indian Oxygen Ltd. v. Collector of Central Excise, emphasizing that excise duty is a tax on the manufacturer, not on profits from transportation. The Tribunal concluded that the excess freight collected by the appellant should not be included in the assessable value of excisable goods. This decision was reinforced by the Tribunal's recent ruling in the case of Kashyap Sweeteners Ltd, aligning with the Supreme Court's stance on the matter.

Furthermore, the judgment highlighted that the excess amount of freight collected from customers constitutes profit from transportation and should not be considered part of the value of goods. The Tribunal noted that this principle applied even after the amendment to Section 4 and related rules post-July 1, 2000. Therefore, the demand and penalties were deemed unsustainable, leading to the setting aside of the impugned order and allowing the appeals.

In conclusion, the Tribunal held that the excess freight recovered by the appellant should not be included in the assessable value of excisable goods, based on established legal principles and precedents. The decision was made in line with the Supreme Court's interpretation of excise duty as a tax on manufacturers, not transportation profits, ultimately leading to the allowance of the appeals and setting aside of the impugned order.