2006 (5) TMI 42 - AT - Central Excise

Appellate Tribunal excludes freight charges from assessable value in excise case

The Appellate Tribunal ruled in favor of the appellant, holding that freight charges collected through commercial invoices but not indicated in the excise ... Valuation(Central Excise) – Alleged that all freight charges collected through commercial invoices are included in assessable value – As per Supreme Court decision it can’t be includible in assessable value Issues:1. Whether freight charges collected through commercial invoices should be added to the assessable value.Analysis:The appeal in question originated from an Order-in-Appeal passed by the Commissioner (Appeals), Bangalore, concerning the inclusion of freight charges in the assessable value. The central issue revolved around whether the freight charges, collected through commercial invoices but not indicated in the excise invoices, should be added to the assessable value as per provisions of the Central Excise Act and Rules. The assessee contended that there was no contravention of relevant provisions, citing Supreme Court judgments and Tribunal rulings to support their position.The learned Counsel for the appellant argued that the issue was decisively settled in their favor by an Apex Court judgment, which had been consistently followed in various Tribunal rulings. They submitted that the appeal should be allowed based on the precedents set by these judgments. On the other hand, the learned SDR reiterated the Departmental view on the matter.Upon careful consideration, the Appellate Tribunal observed that the clearances were ex-factory in accordance with Section 4(1)(a) of the Central Excise Act. It was noted that the additional freight charges collected by the appellants via commercial invoices were not reflected in the Excise Invoices. Relying on the Supreme Court's decision in the case of Escorts JCB Ltd. v. CCE and subsequent Tribunal rulings such as Majestic Auto Ltd. v. CCE, Shasun Chemicals and Drugs Ltd. v. CCE, and P.J. Margo Pvt. Ltd. v. CCE, the Tribunal held that the freight charges did not need to be added to the assessable value. The Tribunal disagreed with the lower authorities' interpretation and emphasized that the absence of specific details in the Excise Invoices did not justify the Revenue's action to include the freight charges. Consequently, the impugned order was deemed improper and set aside, with the appeal being allowed along with any consequential relief.This comprehensive analysis of the judgment showcases the detailed examination of the legal issues involved, the arguments presented by both parties, and the authoritative legal precedents that guided the Tribunal's decision in resolving the matter of including freight charges in the assessable value.