2017 (12) TMI 1533 - AT - Central Excise

CENVAT credit - includibility - whether the freight insurance collected by the appellant separately over and above the invoice value by raising the commercial invoice is includible in the assessable value of the excisable goods? - Held that - the purpose of showing freight separately in the invoice is only to show the actual amount of freight. However freight per say is not includible in the assessable value - Merely because the transportation charges are not mentioned in the excise invoice, the same cannot be charged to excise duty - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Inclusion of freight insurance in the assessable value of excisable goods.

Analysis:
The judgment dealt with the issue of whether the freight insurance collected separately by the appellant should be included in the assessable value of excisable goods. The lower authority had confirmed the demand, stating that transportation charges were not shown separately in the invoice, thus not excludable from the assessable value under Rule 5 of Central Excise Valuation Rules, 2000. The appellant argued that even though transportation was not separately shown in the excise invoice, the actual freight paid was reflected in the commercial invoice. The appellant negotiated this transportation amount with the buyer over and above the goods' price. The appellant contended that transportation charges should not be included in the assessable value as per Section 4 (1) (a) read with Rule 5 of Central Excise Valuation Rules, 2000. The appellant cited various judgments to support their case.

The Revenue, represented by the Superintendent (A.R.), reiterated the findings of the impugned order. The Tribunal carefully considered both sides' submissions and observed that the lower authorities confirmed the duty demand solely because transportation charges were not separately shown in the invoice issued under Rule 11 of Central Excise Rules, 2001. The Tribunal clarified that the purpose of showing freight separately in the invoice was to indicate the actual amount paid for freight, but freight itself should not be included in the assessable value. The Tribunal emphasized that whether the freight amount was separately shown in the Rule 11 invoice or raised in a separate transportation invoice, it was identifiable as transportation charges. The Tribunal concluded that the absence of transportation charges in the excise invoice should not result in excise duty liability. The Tribunal found the appellant's arguments supported by the judgments cited and modified the impugned order, allowing the appeal.

In conclusion, the Tribunal held that the freight insurance collected separately by the appellant, over and above the invoice value, was not includible in the assessable value of the excisable goods. The judgment emphasized that the identification of transportation charges was crucial, regardless of whether they were separately shown in the invoice or raised in a separate transportation invoice. The Tribunal's decision was based on the interpretation of relevant provisions and supported by precedents cited during the proceedings.