2017 (9) TMI 865 - AT - Central Excise

Valuation - excess transportation charges - whether the deferential amount between the equalized freight collected and actual cost incurred for transportation is to be added to the assessable value? - Held that - the issue has been decided by the Hon ble Supreme Court in the case of M/s Baroda Electric Meters Ltd. 1997 (7) TMI 126 - SUPREME COURT OF INDIA wherein it was held that duty of excise is a tax on manufacture and not tax on profit made by a dealer on transportation - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confirmation of Central Excise duty and penalty by Commissioner (Appeals)
2. Liability of the appellant for excess transportation charges
3. Interpretation of Rule-5 of Valuation Rules, 2000
4. Appeal against Order-in-Original
5. Applicability of duty of excise on transportation charges
6. Ruling of the Hon'ble Supreme Court on the issue

Analysis:
1. The appeal was filed against the order of the Commissioner (Appeals) confirming the Central Excise duty of ?22,06,738/- with interest and imposing a penalty under Rule 25 of the Central Excise Rules, 2002. The appellant, a manufacturer of Brass Furniture Parts and Meter Pillar Boxes, supplied meters to State Electricity Boards during specific periods. The dispute arose when the Revenue alleged that the appellant had charged excess transportation charges from customers, leading to the demand for excise duty based on the difference between the charged amount and actual transportation costs incurred.

2. The appellant contested the imposition of excise duty on excess transportation charges, arguing that excise duty is a tax on manufacture and not on profit derived from transportation. The appellant cited judgments of the Hon'ble Supreme Court in various cases to support this contention. The Tribunal noted that the issue of whether the differential amount between equalized freight collected and actual transportation cost should be added to the assessable value had been settled by the Hon'ble Supreme Court in previous cases.

3. After considering the arguments and reviewing the records, the Tribunal found that the issue had already been addressed by the Hon'ble Supreme Court in cases such as M/s Baroda Electric Meters Ltd. The Tribunal agreed with the principle that excise duty is levied on manufacture and not on the profit earned from transportation. Therefore, the Tribunal concluded that the impugned Order-in-Appeal was not sustainable and allowed the appeal by setting it aside.

4. In summary, the Tribunal ruled in favor of the appellant, overturning the decision of the Commissioner (Appeals) and holding that excise duty is not applicable to the profit made by a dealer on transportation. The judgment emphasized the principle that excise duty is a tax on manufacture, as established by previous decisions of the Hon'ble Supreme Court.