2017 (8) TMI 99 - AT - Central Excise

Valuation - Transportation Charges recovered from the buyers - includibility - Held that - the purchased order issued by M/s Caparo Engineering India Pvt. Ltd. Pithampur Distt. Dhar (MP) which shows that the price is excluding Sales Tax Excise Duty Transportation Charges and corresponding invoice also shows that the appellant has charged transportation charges separately - The issue is squarely covered by the decision of this Tribunal in their own case for the earlier period 2016 (2) TMI 145 - CESTAT NEW DELHI where it was held that when the sale and delivery take place at the factory gate and freight charges which are in relation to an independent transaction is mentioned separately in the invoices the amount of freight has no relevance for valuation purposes. The transportation charges are not includable in the assessable value - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against demand of Central Excise duty on Transportation Charges
- Interpretation of assessable value and inclusion of transportation charges
- Application of Valuation Rules and Section 4(1)(a) of the Act

Analysis:
1. The appellant challenged an order demanding Central Excise duty on Transportation Charges recovered from buyers. The appellant, engaged in manufacturing, was accused of recovering more freight charges than actually incurred, leading to duty demand, interest, and penalty. The appellant argued citing a previous Tribunal decision in their favor for a different period.

2. The respondent contended that a purchase order indicated inclusion of freight in the assessable value, justifying duty on transportation charges. The appellant, in response, presented evidence of separate invoicing for transportation charges, seeking to annul the impugned order based on the Tribunal's previous ruling in their favor.

3. Upon review, the Tribunal found the purchase order excluded transportation charges from the assessable value, aligning with the appellant's separate invoicing practice. Referring to a previous judgment, the Tribunal emphasized the importance of transaction value at the factory gate, dismissing the need for additional valuation under Rule 5 of the Valuation Rules.

4. The Tribunal clarified that when the transaction value at the factory gate is evident, any excess transportation charges collected should not impact the valuation. Citing legal precedents, the Tribunal concluded that transportation charges, when invoiced separately and not affecting the factory gate price, should not be considered for valuation purposes.

5. Ultimately, the Tribunal ruled in favor of the appellant, overturning the impugned order and allowing the appeal. The decision rested on the precedent set by the Tribunal in a prior case, confirming that transportation charges should not be included in the assessable value based on the specific circumstances of the case.