2024 (9) TMI 1171 - AT - Central Excise

Non-inclusion of handling charges in the assessable value for excise duty purposes - recovery of amount towards handling charges as well as inspection charges in the invoice from their buyers - whether the appellant charging equalized handling charges from their customers on excisable goods is includible in the assessable value for charging excise duty or otherwise? HELD THAT - This very issue in the appellant s sister concern MESSRS MIRA INDUSTRIES VERSUS C.C.E. -AHMEDABAD-II 2023 (4) TMI 655 - CESTAT AHMEDABAD this Tribunal has taken a view that the handling charges recovered from the customers is not includible in the assessable value. The facts of the above case and the case in hand are absolutely identical. Therefore, following the judgment of Mira Industries, in the present cases the handling charges is not includible in the assessable value of the excisable goods. Accordingly, the demand in this respect is not sustainable. Appeal allowed.

Summary

Issues Involved:
1. Inclusion of handling charges in the assessable value for excise duty purposes.
2. Adherence to judicial precedents and principles of natural justice by the Commissioner (Appeals).

Detailed Analysis:

Issue 1: Inclusion of Handling Charges in Assessable Value

The primary issue in this case is whether the handling charges recovered by the appellant from their customers should be included in the assessable value for the purpose of charging excise duty. The department's stance is that these charges should be included as per Section 4 of the Central Excise Act, 1944, and the board circular NO. 643/24/2002-CE dated 01.07.2002. However, the appellant argues that handling charges are not includible in the assessable value, citing various judgments to support their claim.

The Tribunal referred to several precedents, including the Supreme Court's judgment in "Accurate Meters Ltd - 2009 (235) ELT 581 (SC)" and other cases like "Guwahati Carbon Ltd -2009 (243) ELT 307" and "West Coast Paper Mill Ltd - 2004 (172) ELT 496." These judgments held that transportation charges, even if not on an actual basis, are not includible in the assessable value of goods. The Tribunal also noted that in the appellant's sister concern, M/s. Mira Industries vs. CC - Ahmedabad - 2023 (4) TMI 655 (Ahd.), it was decided that handling charges recovered from customers are not includible in the assessable value.

The Tribunal found that the handling charges shown separately in the invoices are indeed transportation/handling costs and not additional consideration. There was no evidence provided by the department to show that these charges were an arrangement to reduce the assessable value of goods. Therefore, the Tribunal concluded that the handling charges should not be included in the assessable value.

Issue 2: Adherence to Judicial Precedents and Principles of Natural Justice

The appellant argued that the Commissioner (Appeals) did not follow the established judicial precedents, thereby violating the principles of natural justice and judicial discipline. The Tribunal agreed with the appellant, noting that the Commissioner (Appeals) failed to consider the relevant judgments cited by the appellant, including those from the Supreme Court and CESTAT.

The Tribunal emphasized that the decision in the appellant's own case, "Lubi Submersibles Ltd. & Ors," and other similar cases, clearly established that handling charges shown separately in invoices are not includible in the assessable value. The Tribunal reiterated that the facts of the present case were identical to those in the cited judgments, and thus, the handling charges should not be included in the assessable value.

Conclusion:

The Tribunal set aside the impugned orders and allowed the appeal. It concluded that the handling charges recovered from customers, when shown separately in the invoices, are not includible in the assessable value for charging excise duty. The decision was pronounced in the open court on 19.09.2024.