2015 (1) TMI 330 - AT - Central Excise

Demand of differential duty - Appellants are clearing the goods at the factory gate and at the request of the customers, the appellants are also discharging the transportation charges and premium of transit insurance, which was separately mentioned in the invoices - Held that - As per the contract, basic price including excise duty is available and, in addition to the same, the freight and insurance charges are separately mentioned and in the invoice also transportation charges and insurance charges are separately mentioned. In view of this, we find that inclusion of freight and insurance charges to the assessable value of goods manufactured is not sustainable. The impugned order is set aside - Decided in favour of assesse.

Summary

Issues:
1. Appeal against demand confirmed by Commissioner (Appeals) with penalties.
2. Dispute over inclusion of transportation and insurance charges in assessable value of goods.
3. Interpretation of contract terms regarding freight and insurance charges.
4. Assessment of duty based on factory gate price.

Analysis:
1. The appellant filed an appeal against the order passed by the Commissioner (Appeals) confirming a demand of Rs. 13,418/- along with interest and penalties. The issue revolved around the imposition of penalties and the confirmation of the demand by the Commissioner (Appeals).

2. The case involved the dispute over the inclusion of transportation and insurance charges in the assessable value of goods manufactured by the appellants. The show cause notice alleged that the goods were cleared on FOR basis, making the actual place of removal the customer's location, not the factory gate. The adjudicating authority upheld the demand, and the Commissioner (Appeals) affirmed the decision.

3. The appellants argued that as per the agreement with Orissa Mining Corporation Ltd., the freight and insurance charges were separately charged based on actual terms of the agreement. The contract specified the basic price inclusive of excise duty, with transportation charges at Rs. 52/- per case of 1000 meters and transit insurance cost at 0.04p. per coil. The contention was that since appropriate duty was paid on the factory gate price, the inclusion of freight and insurance charges in the assessable value was impermissible.

4. Upon examining the contract and the invoice, the Tribunal found that the basic price inclusive of excise duty was clearly mentioned, with separate disclosure of freight and insurance charges. The transportation and insurance charges were explicitly stated in both the contract and the invoice. Consequently, the Tribunal concluded that the inclusion of these charges in the assessable value of the manufactured goods was not justified. As a result, the impugned order was set aside, and the appeal was allowed.

This detailed analysis of the judgment highlights the key issues, arguments presented, and the Tribunal's reasoning leading to the final decision in favor of the appellant.