2018 (7) TMI 1921 - AT - Central Excise

Tribunal Upholds Decision on Excise Duty Valuation, Rejects Revenue's Appeal

The Tribunal upheld the decision of the Ld. Commissioner (Appeals), rejecting the Revenue's appeal regarding the valuation of excisable goods for charging ... Valuation - inclusion of transportation charges in assessable value - contravention of Rule 7 of Central Excise (Valuation) Rules 2000 read with Section 4(3)(d) of Central Excise Act, 1944 - HELD THAT:- The issue is no more res-integra in view of the decision of the Co-ordinate Bench of the Tribunal in the case of Associated Drug Company Vs. Commissioner of Central Excise, Bangalore [2004 (11) TMI 238 - CESTAT, BANGALORE], where it was held that the excise duty is a duty on the manufacture and therefore demanding duty on the transportation charges on the ground that they were not included in the invoices is not legal - appeal dismissed - decided against Revenue. Issues:Valuation of excisable goods for charging duty under Central Excise Act, 1944 based on transportation charges mislabeled as depot charges and handling charges. Interpretation of Section 4 of the Act and Rule 7 of Central Excise (Valuation) Rules, 2000.Detailed Analysis:1. Valuation of Excisable Goods: The case involved the mislabeling of transportation charges as depot charges and handling charges by the appellant during sales from different depots across the country. The issue arose when a Show Cause Notice was issued questioning the inclusion of these charges in the assessable value under Rule 7 of Central Excise (Valuation) Rules, 2000 read with Section 4(3)(d) of Central Excise Act, 1944. The Adjudicating Authority confirmed the demand of Basic Excise Duty and Additional Excise Duty along with interest and penalty.2. Interpretation of Section 4: The Ld. Commissioner (Appeals) set aside the adjudication order, leading to the Revenue's appeal before the Tribunal. The Tribunal analyzed Section 4 of the Act, which was substituted with effect from 01.07.2000. The section outlines the valuation of excisable goods for charging excise duty, emphasizing the transaction value when goods are sold. The Tribunal reviewed the relevant provisions and circulars to determine the correct valuation method based on the sale price prevalent at the depot on the date of removal from the factory.3. Precedents and Legal Interpretations: The Tribunal referred to previous decisions and legal interpretations to support its analysis. Citing cases like Lipi Data System Ltd. Vs. Commissioner of Central Excise and Steel Authority of India Limited Vs. Commissioner of Central Excise, the Tribunal emphasized the importance of valuing goods based on the sale price prevailing at the place of removal (depot). Additionally, the Tribunal highlighted the decision of the Hon’ble Supreme Court in Commissioner of Central Excise Vs. Accurate Meters Ltd., which clarified that freight and insurance charges are not includible in the assessable value.4. Rule 5 of Valuation Rules: The Tribunal also discussed the applicability of Rule 5 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. In a related case, the Tribunal ruled that transportation charges may be allowed as a deduction from the assessable value only when they are charged to the buyer in addition to the price of the excisable goods and are shown separately in the invoices. The Tribunal agreed that excise duty is levied on the manufacture and not on transportation charges, supporting the appellant’s argument that the factory gate price should be considered when determining the assessable value.5. Decision and Conclusion: Ultimately, the Tribunal found no infirmity in the impugned order and upheld the decision of the Ld. Commissioner (Appeals), rejecting the Revenue's appeal. The Tribunal’s detailed analysis of the legal provisions, precedents, and interpretation of valuation rules led to the dismissal of the appeal, emphasizing the correct method of valuing excisable goods for excise duty purposes.