Excise On frieght insurance and packing, Central Excise

[jitendra pal]

Sir,

our Company is supplying hardware items to some state government electricity boards

where we have two seprate orders one is for ex works price + excise + cst or vat

and other order is for freight and insurance which is fixed and on average basis

please suggest if excise is applicable on fright and insurance amount also or not

Posts / Replies

[Arun Kumar Singh]

Yes, the freight charges and insurance should be includes in the assessable value of the goods. The after payment of service tax on freight you can take the cenvat credit for payment of excise duty.

[jitendra pal]

But Sir We are already paying service tax on freight and insurance which is applicable

then how come it is determined as assessable value for excise

[Mukul Ved]

Freight and Insurance is not part of Assessable Value for Central Excise as per Section 4 of the Central Excise Act, 2002. However, in this case you are supplying finished goods, you can not avail Cenvat Credit of Service Tax paid as reverse charge for freight and service tax charged by insurance co. for insurance. The goods are delivered and factory gate is supposed to be point of clearance the credit of Service Tax finished goods after clearance is not admissible. You can only avail Service Tax paid for bringing your inputs in your Central Excise registered premises

[Mukul Ved]

To further add pecking charges are part of Assessable Value for Central Excise and atracts Central Excise duties

[PARTHASARATHY V]

Sir,

As per the the sec 4 of Excise, the freight, Insurance is not forming part of the valuation of excisable goods if the Insurance and Freight is charged actually without any notional value.

If the both is charged on Notional value, then the both should be added to the Assessable vale. Also if the Freight is on FOR (Free on Road) basis, then you are entitled to take the credit of GTA paid by you.

In a nutshell it is based on the agreement entered and the actual of the Freight & Insurance. You can decide accordingly, but documentary evidence is required for the actual freight / insurance paid by you.

[Kalyanasundaram V.V.]

Excise duty is payable on the value at the point of delivery. In a factory gate sale i.e ex works, the delivery is at factory gate and the buyer pays for the freight and insurance. Therefore Excise duty is payable on ex factory value. In the other case, the point of delivery is at the customer's place, and the price which includes freight and transit insurance is the assessable value, on which Excise duty is payable