2023 (7) TMI 42 - AT - Central Excise

Levy of short paid excise duty - deduction of cost of transportation incurred from depot (being the place of removal) to the dealer s place - equalized freight - CBEC Circular No. 287/3/97-CX dated 14.01.1997 - Certificates of the chartered Accountant offer any classification as to as to what the primary and secondary freight actually represent or not. HELD THAT - The Appellant has stock transferred their final products to various depots from where they sold the goods to their ultimate customers. After the amendment of section 4 and depot has been added as a place of removel freight is includable in the asseable value only upto the place of removal ie, depot in this case. The Appellant has been delivering the goods from their depot to the dealer s premises. The cost of transportation of the goods from the depot to the dealer s premised is not includable, as per the amended section 4 of the Central Excise Act, 1994. The Commissioner (Appeals) agrees that the cost of transportation upto the place of removal only includable in the assessable value. But, he rejects the claim of deduction of equalized freight made by the Appellant on the ground that the CA certificate did not clarify what constitutes primary and secondary freight. It is observed that the CA certificate has claimed deduction of equalized freight only from the depot to the dealer s premised from the assessable value. There is no other material evidence brought on record to doubt the veracity of the CA certificate. Whether it is called primary or secondary freight is only a nomenclature - there are no merit in the observation of Commissioner (Appeal). Board Circular 287/3/97 dated 14.10.97 has not disallowed deduction of equalised freight on all circumstances. Deduction of equalized freight is not allowed only on the circumstances mentioned in para 5 of the Circular. The Circular, clearly states that deduction is allowed on freight and insurance. There is no dispute that the transportation cost beyond the place of removal is not includable in the assessable value. Only the method of working needs to be checked. In the present case, the Appellant has produced the CA certificate and explained how they arrived at the equalised freight. If there is any doubt on the validity of the CA certificate, then the department should have brought in evidence to substantiate that. In the absence of any evidence to doubt the veracity of the CA certificate, the deduction of equalised cost of transportation as claimed by the Appellant is admissible. Appeal allowed.

Summary

Issues Involved:
The eligibility of deductions claimed by the Appellant on account of the deduction of the cost of transportation incurred from depot to the dealer's place.

Summary:
The Appellant stock transferred their final products to various depots from where they sold the goods to their ultimate customers. They claimed deductions on account of the cost of transportation on an equalized basis. A show cause notice was issued proposing to levy short-paid excise duty, which was confirmed in the order-in-original. The Commissioner (Appeals) upheld the order in Original based on various findings, including the inadmissibility of deductions as per a CBEC Circular. The Appellant appealed against this decision.

The Appellant argued that the deductions claimed were related to the admissibility of freight incurred for the removal of goods from the depot to the dealer's destination. They contended that the cost of transportation was considered only from the place of removal (branches) to the dealer's destination, as per CA certificates. They also challenged the interpretation of the Circular dated 14.01.1997 and cited precedents where deductions on equalized freight were allowed.

After hearing both sides, the Tribunal observed that deductions on account of the cost of transportation on an equalized basis were admissible. The Commissioner (Appeals) had rejected the claim based on the CA certificate not clarifying primary and secondary freight, but the Tribunal found no merit in this observation. The Tribunal also analyzed the Board Circular and concluded that the deduction of equalized freight was permissible based on the Appellant's submissions and the CA certificate provided. The Tribunal held that the decision of the Hon'ble Supreme Court in VIP Industries case applied to the Appellant, as they maintained a constant price of products throughout the country.

In conclusion, the Tribunal allowed the appeal filed by the Appellant, emphasizing the admissibility of deductions claimed on an equalized basis for the cost of transportation from depot to the dealer's premises.