2013 (12) TMI 683 - AT - Central Excise

Addition of the freight charges to the assessable value Revenue was of the view that the assessees are recovering the freight by issue of debit notes separately and the freight is mentioned in the invoice separately Held that - Following CCE, Noida vs. Accurate Meters Ltd. 2009 (3) TMI 1 - SUPREME COURT The freight charges are not part of assessable value of the goods Assessee contended that the transportation of the goods to the place of their customer is not a condition for sale - It is in some cases where the customer making a request for delivery, the appellants arranged transport and recovered transportation charges as agreed by the customer - order set aside Decided in favour of Assessee.

Summary

Issues:
1. Waiver of pre-deposit of duty, interest, and penalty.
2. Inclusion of freight in the assessable value of goods.
3. Interpretation of the provisions of Section 4 of the Central Excise Act regarding freight charges.
4. Application of the decision of the Hon'ble Supreme Court in CCE vs. Accurate Meters Ltd. to the current case.

Analysis:

Issue 1: Waiver of pre-deposit of duty, interest, and penalty
The applicants filed for a waiver of pre-deposit of duty amounting to Rs.77,053, along with interest and penalty. The demand was confirmed by adding freight to the assessable value of the goods. The Revenue contended that the applicants were recovering freight separately through debit notes, which was not reflected in the invoice separately.

Issue 2: Inclusion of freight in the assessable value of goods
The case revolved around whether the freight charges should be considered as part of the assessable value of the goods. The Revenue argued that since the applicants recovered freight separately and it was not shown in the invoice separately, it should be added to the assessable value. However, the applicants relied on the decision of the Hon'ble Supreme Court in CCE vs. Accurate Meters Ltd., which held that freight charges are not part of the assessable value of goods.

Issue 3: Interpretation of Section 4 of the Central Excise Act
The appellants, engaged in manufacturing hydrogen peroxide and clearing it by paying duty under Section 4 of the Central Excise Act, were issued a show cause notice for recovering freight separately through debit notes. The appellants argued that transportation to the customer's place was not a condition for sale, and transportation charges were recovered based on customer requests.

Issue 4: Application of the decision in CCE vs. Accurate Meters Ltd.
The Tribunal found that the issue concerning the inclusion of freight charges in the assessable value of goods was settled by the decision of the Hon'ble Supreme Court in the case of Accurate Meters Ltd. The Supreme Court had ruled that freight charges are not to be considered part of the assessable value. Consequently, the impugned order was set aside, and the appeal was allowed based on the precedent established by the Supreme Court.

This judgment highlights the significance of legal precedents in interpreting and applying tax laws, specifically regarding the treatment of freight charges in the assessable value of goods under the Central Excise Act. The decision underscores the importance of consistency and adherence to established legal principles in tax matters.