2017 (3) TMI 1150 - AT - Central Excise

Valuation - freight charges - demand was confirmed only on the ground that the sales depot of the appellant is the place of removal - Held that - From the combined reading of definition of place of removal and Rule 5 of Central Excise Valuation Rules 2000 it is clear that in the transaction value in terms of Section 4 (1) (a) the transportation from the place of removal upto the place of delivery of such excisable goods is excludable from the transaction value - At the relevant time the place of removal was only factory gate or warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty from where such goods were removed. As per the said definition the depot or branch of assessee was not place of removal. Therefore the factory gate is only the place of removal in the present case. If this is so then transportation charges collected from the customers for transportation of goods from the factory gate upto the place of customer is not includable in the assessable value - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Inclusion of freight charges in the assessable value under Central Excise Valuation Rules, 2000.

Analysis:
1. The appellants, engaged in manufacturing excisable goods, recovered freight charges separately from customers for transporting goods from depots/branches. A show-cause notice alleged contravention of Central Excise Act, 1944 and Valuation Rules. The adjudicating authority confirmed the demand of duty on freight, imposed a penalty, and interest. The Commissioner (Appeals) upheld this decision.

2. The appellant argued that during the relevant period, transportation from factory gate to depot wasn't includable in the assessable value as depot/branches weren't considered places of removal. Cited judgments supported this argument. The Revenue, represented by the Assistant Commissioner, relied on a different judgment.

3. The Tribunal analyzed the definition of "place of removal" under Section 4(3)(c) and Rule 5 of Central Excise Valuation Rules, 2000. It concluded that transportation charges from factory gate to customer's place weren't includable in the assessable value as depot/branch wasn't a place of removal. The Tribunal referenced a previous case to support its decision.

4. The Tribunal rejected the Revenue's reliance on a different judgment, clarifying that the issue in the present case was distinct. Ultimately, the Tribunal held that the demand was unsustainable, setting aside the impugned order and allowing the appeal.

This detailed analysis of the judgment highlights the legal arguments, interpretations of relevant laws, and the ultimate decision reached by the Appellate Tribunal CESTAT MUMBAI in the case concerning the inclusion of freight charges in the assessable value under Central Excise Valuation Rules, 2000.