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2016 (6) TMI 768 - AT - Central ExciseValuation - petroleum products - At the time of clearance from the said terminal, the respondents were collecting ₹ 44/- per KL over and above the assessable value declared as Free Delivery Zone (FDZ) charges - Revenue argued that the said amount is not related to transportation but is an additional consideration - Held that - There is a large number of decisions of the Tribunal had allowed deduction of such charges collected for delivery of goods within the FDZ - he appellant had submitted the data before the Commissioner which shows that the amount of freight collected is less than the actual expenditure. - any amount of freight which is collected in excess of actual freight is not includible in the assessable value. - Decided in favor of assessee.
Issues Involved:
1. Inclusion of Free Delivery Zone (FDZ) charges in the assessable value. 2. Proper interpretation and application of CBE&C Circular No. 354/81/2000-TRU dated 30.6.2000. 3. Distinction between delivery charges and freight charges. 4. Examination of the quantum of freight charges collected. Detailed Analysis: 1. Inclusion of Free Delivery Zone (FDZ) Charges in the Assessable Value: The primary issue was whether the FDZ charges of ?44/- per KL collected by the respondents for sales within the Free Delivery Zone should be included in the assessable value. The Revenue contended that these charges were not related to transportation but were an additional consideration, and thus should be included in the assessable value. The Commissioner, however, held that the basic prices of MS/HSD are inclusive of transportation charges and that these charges, shown separately in the invoices, are deductible. The Tribunal upheld this view, referencing the CBE&C Circular, which allows the exclusion of transportation costs from the assessable value if shown separately in the invoice. 2. Proper Interpretation and Application of CBE&C Circular No. 354/81/2000-TRU dated 30.6.2000: The Revenue argued that the Circular was not properly interpreted by the Commissioner. Specifically, the Circular states that if the pricing includes equated freight for delivery at the factory gate or elsewhere, no deductions for the freight element are permissible. The Tribunal found that the Commissioner had correctly interpreted the Circular, allowing the deduction of transportation costs shown separately in the invoice. 3. Distinction Between Delivery Charges and Freight Charges: The Revenue argued that the Commissioner confused delivery charges with freight charges, asserting that the ?44/KL collected was an additional consideration, not freight. The Tribunal noted that the grounds of appeal recognized the charge as a freight charge. The Tribunal also referenced several decisions, including previous rulings in the respondent's own case, where similar deductions were allowed, affirming that freight charges, even if averaged, are deductible from the assessable value. 4. Examination of the Quantum of Freight Charges Collected: The Revenue raised concerns about the Commissioner accepting the ?44/- per KL figure without proper examination. The Tribunal found that the respondents had submitted data showing that the actual expenditure on freight was higher than the amount collected. Moreover, the Tribunal cited precedents where excess freight collected over actual costs was not included in the assessable value. The Tribunal referenced the Supreme Court's decision in Baroda Electric Meters and other Tribunal decisions, which established that excess freight retained by the assessee does not form part of the assessable value. Conclusion: The Tribunal concluded that the appeal filed by the Revenue lacked merit. It upheld the Commissioner’s order, allowing the deduction of ?44/- per KL as freight charges from the assessable value, and rejected the Revenue's appeal. The Tribunal emphasized that the established legal principles and precedents support the exclusion of averaged or excess freight charges from the assessable value when shown separately in the invoice. Pronouncement: The judgment was pronounced in Court on 10.6.2016, rejecting the Revenue's appeal and disposing of the CO.
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