2017 (3) TMI 419 - AT - Central Excise

Valuation - Transportation charges - whether the assessee is required to pay Central Excise duty on the amount of Transportation charges incurred under the provisions of Section 11A(1) of Central Excise Act, 1994 - Held that - transportation charges are deductible, if the same are shown separately as provided u/r 5 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - in the present case, it is evident that transportation charges are shown separately by the respondent-assessee - appeal dismissed - decided against Revenue.

Summary

Issues:
Whether the respondent-assessee is required to pay Central Excise duty on transportation charges under Section 11A(1) of the Central Excise Act, 1994.

Analysis:
The respondent-assessee, engaged in manufacturing locomotives and parts falling under specific tariff headings, cleared a locomotive to a buyer and paid Central Excise duty on the assessable value. The issue arose when it was discovered that transportation charges were also included in the invoice amount. The respondent-assessee contended that transportation charges should be excluded from the assessable value. A Show Cause Notice was issued for levying duty on the transportation charges, which was contested, resulting in the confirmation of the demand with interest and penalty.

Analysis (Contd.):
The respondent-assessee appealed, citing relevant Board Circulars allowing exclusion of transportation charges. On the other hand, the Revenue appealed, arguing that the Commissioner erred in setting aside the duty demand on transportation charges. Upon review, the Tribunal noted that transportation charges were shown separately by the respondent-assessee, as required by Rule 5 of the Central Excise Valuation Rules. Consequently, the Show Cause Notice was deemed misconceived, and the appeal of the Revenue was dismissed. The respondent-assessee was granted consequential relief.

Conclusion:
The judgment by the Appellate Tribunal CESTAT ALLAHABAD clarified that transportation charges, when shown separately, are deductible from the assessable value for Central Excise duty calculation. The Tribunal dismissed the Revenue's appeal, upholding the exclusion of transportation charges and granting relief to the respondent-assessee.