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TMI Blog2023 (12) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... the risk of damage during the transportation is that of the dealer and therefore, the assessable value is the transaction value in terms of Section 4(1)(a) of the Act and the provisions of Section 4(1)(b) and Valuation Rules are not applicable. This issue has recently been considered by the coordinate bench of the Ahmedabad in the case of KASHYAP SWEETNERS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VAPI AND JITENDRA PANDEY VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VAPI [ 2023 (7) TMI 1111 - CESTAT AHMEDABAD] , wherein the Tribunal has held excess amount of freight from the customer is profit on account of transportation and not part and parcel of the value of the goods therefore, same cannot be included in the assessable value. The impugned orders are not sustainable in law - Appeal allowed. - MR. S. S. GARG, MEMBER (JUDICIAL) AND MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) Ms. Krati Singh, Shri Aman Garg, Advocates for the Appellant Shri Nikhil Kumar Singh, Shri Narinder Singh, Shri Yashpal Singh, Authorised Representative for the Respondent ORDER These two appeals are directed against two impugned orders dated 31.07.2012 and 17.09.2012 passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination of Price of Excisable Goods) Rules, 2000. 2.2 In this background, two show cause notices dated 07.10.2011 and 08.05.2012 were issued to the appellant proposing demand of duty alongwith interest and penalty. 2.3 After following due process, the Adjudicating Authority vide the impugned orders dated 31.07.2012 and 17.09.2012 confirmed the demand proposed in the show cause notices. 2.4 Aggrieved by the said order, the appellant is before us. 3. Ld. Counsel appearing for the appellant submits that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law and the binding judicial precedents on identical issues. She further submits that freight is recovered from the dealers on the basis of estimation of freight element based on per kilometer basis for each transporter on a standard 44 motorcycle capacity vehicle. However, the freight recovery from the dealers may either be over, or excess recovered depending on whether the capacity of transporting vehicle is less or more than 44 motorcycles. She further submits that as per Section 4(1)(a) of the Excise Act, assessable value of the excisable goods shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mumbai) f) Indian Sugar General Engineering Corpn. Vs. CCE, Panchkula 2017 (8) TMI 99- CESTAT CHANDIGARH g) Indian Sugar General Engineering Corpn. Vs. CCE, Panchkula 2016 (333) E.L.T. 109 (Tri. - Del.) h) Mercedes Benz India Pvt. Ltd. v. Commissioner 2010 (260) E.L.T. 149 (Tri. - Mumbai) i) Indian Sugar General Engineering Corpn. Vs. CCE, Panchkula 2017 (8) TMI 99- CESTAT CHANDIGARH j) Indian Sugar General Engineering Corpn. Vs. CCE, Panchkula 2016 (333) E.L.T. 109 (Tri. - Del.) k) Associated Strips Limited vs. CCE, Delhi-IV 2017 (11) 1244 - (Tri- Chand.) 3.2 She also submits that the excess freight collected by the Appellant from the buyer is merely a profit which is not subject to excise duty. It is settled law that excess freight collected is merely a profit and excise duty cannot be levied. For this submission, she relied upon the following decisions:- a) ICOMM Tele Ltd. v. Commissioner 2010 (251) E.L.T. 103 (Tri-Bang.) (Appeal filed before Supreme Court dismissed as withdrawn) b) Commissioner of Central Excise Cus., Bbsr-l vs. J.K. Paper Ltd. 2012 (284) E.L.T. 706 (Tri. Kolkata) (Appeal filed before Supreme Court dismissed as withdrawn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduct is as per the requirement of the dealer. 4.1 Ld. DR took us through Section 4 of the Central Excise Act, 1944 relating to valuation and submits that in the present case delivery of goods is not at the time and place of removal and therefore, the valuation in this case will be governed by Rule 5 of the Valuation Rules, 2000. 4.2 Ld. DR thereafter took us through Rule 5 of the Valuation Rules and submitted that any amount paid by the buyer including outward handling but excluding the actual cost of transportation will form part of the transaction value. For this submission, he relied upon the following decisions:- a) East India Udyog Ltd. 2017 (354) ELT 147 (Tri.-Del.) b) Wearwell Tyres Tubes Industries Private Ltd. -2010 (257) ELT 126 (Tri.-Del.) 4.3 Ld. DR also submitted that the decisions relied upon by the appellant are not applicable in the present case as the issue involved in those cases pertaining to the period prior to 1.7.2000 when the relevant section was amended to replace the concept of normal price with concept of transaction value. 4.4 Ld. DR further submits that the appellant has heavily relied upon the decision of the Hon ble Apex Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port of their submissions. The objection of the Ld. DR that the case laws relied upon by the appellant relates to the period prior to 1.7.2000 is not correct. 5.5 Here, we may refer to the decision in the case of Mercedes Benz India Pvt. Ltd. cited (supra) wherein the issue of duty liability on excess freight recovered from the customers has been settled by the Tribunal and the Tribunal has held as under:- 6. We have perused the agreement between the assessee and one of the dealers and we find that the sale of goods took place at factory gate and the dealer was liable to take delivery of the goods at factory gate. In other words, the dealer was liable to incur the cost of transportation from the factory gate to his own premises. It is also on record that the cost of transportation was initially incurred by the assessee and subsequently recovered from the buyer. What was actually paid by the assessee to the transporter will, of course, be the actual cost of transportation and the same was liable to be excluded from the assessable value even as per Rule 5 relied on by the Revenue. The question which now arises for consideration is whether the amount collected by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in connection with the transportation of the goods. The nexus is not between the amount and the sale of the goods but between the amount and the transportation. This aspect was noted by their lordships in the case of Baroda Electric Meters (supra) and it was held that any excess amount collected by the assessee from their customers would be a profit made on transportation and hence such amount would not be includable in the assessable value of the goods since the duty of excise was a tax on manufacture and not on any profit made on transportation. The character of the excess amount collected by the assessee from their dealers stands determined vide Baroda Electric Meters (supra) and therefore, in our considered view, the Revenue is precluded in the present case from contending that such amount represents additional consideration flowing directly or indirectly from buyer to the seller. We are also of the view that the decision of the Hon ble Supreme Court with regard to the nature of the excess freight would not have been different, had their lordships considered the case for any period after 1-7-2000. The reason is that the crucial question is one of fact rather than of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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