2023 (4) TMI 655 - AT - Central Excise

Valuation - Recovery of Central Excise Duty - freight and handling charges recovered from their customers - forming part of assessable value of excisable goods cleared by them from their factory premises - whether the amount shown separately as freight and handling charges in the invoices can be included in the assessable value u/s 4 of the Central Excise Act, 1944 or not? - HELD THAT - There is no evidence on record to show by the department that said charges are nothing but arrangement for reducing the assessable value of goods. In the absence of any such evidence it has to be held that the entire element of freight and handling charges shown separately in the invoices is nothing else but freight and handling charges. It is now a settled law as per the relied upon judgments by the Learned Counsel that any amount collected separately as freight in the invoices cannot be included in the assessable. It is held that amount charged as freight handling charges and separately shown in the invoices cannot be included in the assessable value u/s 4 of the Central Excise Act, 1944. Therefore being the same facts and issue involved in the present case also, the freight and handling charges shown separately in the invoice of the appellant is also not includable in the assessable value of the excisable goods, consequently, duty demand on the said elements is not sustainable. The impugned order is set aside - The appeal filed by the appellant is allowed.

Issues Involved:
The issues involved in the judgment are whether the freight and handling charges collected by the appellant from customers should be included in the assessable value of excisable goods for the purpose of Central Excise Duty.

Detailed Summary:

Issue 1: Inclusion of Freight and Handling Charges in Assessable Value

The appellant, engaged in manufacturing Power Driven Pumps (PD Pumps), collected freight and handling charges from customers but did not include these charges in the assessable value of excisable goods cleared. The department issued show cause notices proposing recovery of Central Excise Duty on these charges. The adjudicating authority confirmed the demand of duty and imposed penalties. The appellant argued that the recovery was for freight and handling services, not part of the goods' value. They contended that there was no evidence to support the inclusion of these charges in the assessable value. The appellant relied on various judgments to support their case.

Issue 2: Evidence and Jurisdiction of Authorities

The appellant argued that the show cause notices referred to Section 4 of the Act but lacked evidence to prove that the charges were part of the goods' price. They highlighted the absence of proof that the appellant did not provide services like forwarding or handling of goods. The appellant contended that the authorities could not conclude that these charges were part of the assessable value without sufficient evidence.

Issue 3: Judicial Precedents and Legal Position

The appellant cited several judgments to support their argument that charges shown separately as freight in invoices should not be included in the assessable value. They emphasized that activities like freight and handling are not part of assessable value. The appellant's counsel presented legal precedents to establish that such charges should not be subject to excise duty.

Issue 4: Bench's Decision

After considering submissions from both sides and examining the records, the Bench concluded that the charges for freight and handling, shown separately in the invoices, should not be included in the assessable value under Section 4 of the Central Excise Act, 1944. The Bench noted that the duty had been discharged based on transaction value during the disputed period. Citing legal precedents, the Bench held that these charges were not additional consideration but specific costs for freight and handling. The judgment referenced previous cases where similar issues were decided in favor of the appellant.

Conclusion:

The Bench set aside the impugned order, allowing the appeal filed by the appellant. The judgment emphasized that charges for freight and handling, when separately shown in invoices, should not be included in the assessable value of excisable goods, leading to the duty demand on these elements being deemed unsustainable.

(Pronounced in the open court on 10.04.2023)

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