Excise Duty and Sales tax on Freight and Insurance, Central Excise

[vikas anand]

Dear All,

If the term of delivery is our ex-factory gate, but we are arranging Insurance and freight charges up to the buyer site. The same we are charging in the Invoice in below the line of Excise Duty & Sales tax amount and reimbursement made by the buyer. Please confirm Excise Duty and Sales tax will attract on Freight and Insurance.

Please be note that the charging of Insurance from buyer is more than we are paying for Insurance companies.

Posts / Replies

[Ganeshan Kalyani]

If the place of removal is factory gate then freight should not be added to Assessable value to pay excise duty but if it customer door step then the same should be added to assessable value to pay excise duty.

Sales tax is levied on sale price. Sale tax shall br charged on freight if it was agreed to a part of sale price. Thanks.

[KASTURI SETHI]

I concur with the views of Sh.Kalyani, Sir. In support most relevant case law is appended below:-

2015 (319) E.L.T. 221 (S.C.) = COMMR. OF CUS. & C. EX., AURANGABAD Versus ROOFIT INDUSTRIES LTD.

2015 (322) E.L.T. 394 (S.C.) = COMMISSIONER OF C. EX., MUMBAI-III Versus EMCO LTD.

[Mahir S]

Excise duty does not appear to be payable; however the excess amount earned through the insurance charges collected from buyer is liable to be shown as profit in the books of accounts.

[YAGAY AND SUN]

We endorse the view of the experts.

[Ganeshan Kalyani]

The income shown on the credit side of the profit and loss account may be checked by the auditor for taxability of service tax.