2024 (9) TMI 1166 - AT - Central Excise

Valuation of Excise Duty - inclusion of freight charges in case of ex-factory sale as well as FOR sale in the assessable value of excisable goods - in agreements with the buyer, there is specific clause for charges of freight and collection thereof - freight charges are shown separately in the same invoice of the excisable goods - invocation of extended period of limitation - HELD THAT - On this issue much water has flown and in the various judgments of the Tribunal as well as the Hon ble Supreme Court, it was consistently decided that the freight charges shown separately in the invoice which is other than the price of the goods shall not include in assessable value of the excisable goods irrespective whether the sale is ex-factory or FOR sale. In the case of Ispat Industries Ltd 2015 (10) TMI 613 - SUPREME COURT the Hon ble Supreme Court held 'When the goods were handed over to the transporter, the respondent had no right to the disposal of the goods nor did it reserve such rights inasmuch as title had already passed to its customer.' The freight charges shown separately in the invoice for which there is a contract between the assessee and the buyers of the goods the said freight charges shall not include in the assessable value of the excisable goods. Thus, in the present fact of the case, the freight charges collected by the appellant separately in the invoice in respect of transportation of excisable goods is not includible in the assessable value. Therefore, consequential demand of duty, penalty and interest will not sustain. Accordingly, the impugned order is set aside - appeal allowed.

Issues Involved:
1. Whether freight charges in case of ex-factory sale as well as FOR sale are includible in the assessable value of excisable goods when agreements with the buyer specify charges for freight and collection thereof, and when the freight charges are shown separately in the same invoice of the excisable goods.
2. Whether the extended period of limitation is invokable in the facts of the present case.

Detailed Analysis:

1. Includibility of Freight Charges in Assessable Value:
- Appellant's Argument: The appellant argued that the issue is no longer res-integra, citing multiple judgments where it was consistently held that freight charges shown separately in the invoice are not includible in the assessable value of excisable goods, irrespective of whether the sale is ex-factory or FOR sale.
- Respondent's Argument: The respondent contended that freight charges should be included in the assessable value, relying on specific judgments, including those of the Supreme Court.
- Tribunal's Analysis: The Tribunal reviewed various judgments and legal provisions, including Section 4 of the Central Excises and Salt Act and the Central Excise Valuation Rules. The Tribunal noted that historically, the value of excisable goods did not include freight charges if these were shown separately in the invoice and were in addition to the price of the goods.
- Key Judgments Referenced:
- Ispat Industries Ltd.: The Supreme Court clarified that the place of removal refers to the manufacturer's premises and not the buyer's premises. Freight charges are not includible in the assessable value if shown separately in the invoice.
- EIMCO Elecon India Ltd.: The Tribunal held that freight charges shown separately in the invoice and specified in the purchase order are not includible in the assessable value.
- Panama Petrochem Ltd.: Similar to EIMCO, the Tribunal held that freight and insurance charges shown separately in the invoice are not includible in the assessable value.
- Escorts JCB Ltd.: The Supreme Court held that the ownership of goods and the arrangement of transit insurance are separate issues and do not impact the includibility of freight charges.
- Roofit Industries Ltd.: Distinguished on facts where the sale was found to occur at the buyer's premises, making freight charges includible in the assessable value.
- Conclusion: The Tribunal concluded that in the present case, the freight charges collected by the appellant separately in the invoice for the transportation of excisable goods are not includible in the assessable value. Consequently, the demand for duty, penalty, and interest does not sustain.

2. Extended Period of Limitation:
- Tribunal's Analysis: The Tribunal did not delve deeply into the issue of the extended period of limitation, as the matter was decided on the merits of the case.
- Conclusion: Since the primary issue was resolved in favor of the appellant on merits, the question of invoking the extended period of limitation became moot.

Final Order:
The impugned order was set aside, and the appeal was allowed with consequential relief as per law. The Tribunal pronounced the judgment in the open court on 18.09.2024.

← Previous Next →