2015 (2) TMI 1051 - AT - Central Excise

Tribunal excludes transportation charges from excise duty calculation, clarifies tax liability for manufacturers

The Tribunal allowed the appeal, setting aside the impugned judgment and providing consequential relief, holding that excess transportation and insurance ... Valuation of goods - Inclusion of excess amount collected as freight charges - Held that:- differential amount not includible in the assessable value since the duty of excise is on manufacture and not on profit made by the dealer on transportation. - Following decision of Baroda Electric Meters Vs. Commissioner of Central Excise - [1997 (7) TMI 126 - SUPREME COURT OF INDIA] - Decided in favour of assessee. Issues:1. Whether excess transportation charges and insurance charges collected by the appellant are includible in the assessable value for excise duty calculation.Analysis:The case involved a manufacturer of polyester yarn who collected excess amounts as freight, insurance, and textile committee fees on the goods sold. A demand of &8377; 17,66,394 was confirmed, with &8377; 88,534 pertaining to excess transportation charges and &8377; 16,77,860 pertaining to excess insurance charges. The appellant argued citing the decision in Baroda Electric Meters case that the excess amounts should not be included in the assessable value for excise duty calculation, as duty is on manufacture, not on dealer profits from transportation. The appellant also referenced Tribunal decisions supporting this contention.The Additional Commissioner argued that the case was similar to the Tripty Drinks case, where transportation charges were included in the assessable value. The Tribunal, after considering the submissions, referred to the Baroda Electric Meters case where it was held that duty of excise is on the manufacturer, not on dealer profits from transportation. The Tribunal found the decision in Tripty Drinks case to be different, as it involved collection of transportation charges without actual transportation, unlike the present case where the excess charges were collected. Consequently, the Tribunal allowed the appeal, setting aside the impugned judgment and providing consequential relief if any.In conclusion, the judgment clarified that excess transportation and insurance charges collected by the appellant are not includible in the assessable value for excise duty calculation, following the principle that duty of excise is on the manufacturer and not on dealer profits from transportation. The Tribunal distinguished the present case from a previous case where transportation charges were included in the assessable value due to different circumstances.