9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (2) TMI 698 - AT - Central ExciseValuation - includibility - Revenue entertained a view that the differential freight amount is required to be added to the assessable value of the goods and duty is to be paid - Held that - The Hon ble Supreme Court in the case of Baroda Electric Meters Ltd. vs. Collector of Central Excise 1997 (7) TMI 126 - SUPREME COURT OF INDIA has held that in case the freight expenses incurred by an assessee are less than the freight expenses recovered by him from his customers, the differential amount will not be includable in the assessable value, since the duty of excise is on manufacture and not on profit made by a person on transportation - amount not includible. Further, as the exports were under bond and no duty was payable, the question of adding differential amount in assessable value and paying duty on the same, does not arise. Appeal allowed - decided in favor of appellant.
Issues:
1. Inclusion of differential freight amount in the assessable value of goods for excise duty calculation. 2. Applicability of Rule 5 of Valuation Rules, 2000 in determining the assessable value. 3. Tax liability on profit made from transportation by a manufacturer. 4. Impact of exports under bond on assessable value and duty payment. Analysis: Issue 1: Inclusion of differential freight amount in the assessable value The appellants, engaged in manufacturing moulds and dies, faced a demand for excise duty due to the Revenue's contention that the differential freight amount incurred by them should be added to the assessable value of goods. The Original Adjudicating Authority and Commissioner (Appeals) upheld this view, albeit restricting the demand to the differential amount. However, the Tribunal referred to the Supreme Court's decision in Baroda Electric Meters Ltd. vs. Collector of Central Excise, emphasizing that the duty of excise is on manufacture, not on transportation profit. The Tribunal disagreed with the lower authorities' interpretation and ruled that the differential freight amount should not be included in the assessable value. Issue 2: Applicability of Rule 5 of Valuation Rules, 2000 The lower authorities argued that Rule 5 of Valuation Rules, 2000 allowed deduction of only the actual freight incurred by a manufacturer, thus justifying the inclusion of differential freight in the assessable value. However, the Tribunal, citing the case of Insulators & Electricals Company vs. Commissioner of Central Excise, Bhopal, held that profit from transportation by a manufacturer is not subject to excise duty. Therefore, the Tribunal rejected the lower authorities' reliance on Rule 5 and reiterated that the differential amount need not be added to the assessable value. Issue 3: Tax liability on transportation profit The Tribunal clarified that excise duty is not applicable to the profit made on transportation by a manufacturer. This principle was reinforced by the Supreme Court's decision and subsequent Tribunal rulings, emphasizing that duty is levied on manufacture, not on transportation-related profits. Issue 4: Impact of exports under bond on assessable value and duty payment Given that the appellants were exporting products under bond, the Tribunal concluded that no duty was payable on the differential freight amount for exports. Therefore, the question of adding the differential amount to the assessable value and paying duty did not arise in the context of export transactions. In conclusion, the Tribunal set aside the impugned order, allowing the appeal and providing consequential relief to the appellant. The decision highlighted the established legal principles regarding excise duty calculation, emphasizing that transportation-related profits should not be included in the assessable value, especially in cases of exports under bond.
|
