2008 (7) TMI 316 - AT - Central Excise

Tribunal overturns Appeal Commissioner decision, grants relief on freight charges and excise duty

MIRZAPUR ELECTRICAL INDUSTRIES LTD. Versus COMMR. OF C. EX., ALLAHABAD

MIRZAPUR ELECTRICAL INDUSTRIES LTD. Versus COMMR. OF C. EX., ALLAHABAD - 2009 (235) E.L.T. 879 (Tri. - Del.) Issues: Interpretation of contract terms regarding freight charges; Applicability of abatement on freight charges in excise duty calculation; Admissibility of differential duty and penalty imposed.In the present case, the appellant manufactured transformers and supplied them to U.P. Power Corporation under a contract where a consolidated freight amount was agreed upon for each piece supplied, regardless of the delivery location. The original authority held that since the invoices only mentioned a flat rate for freight as per the contract, without indicating the actual freight, the freight element cannot be abated. Consequently, a demand for differential duty and a penalty were imposed. The Commissioner (Appeals) upheld this decision. The appellant argued that they paid more transportation charges to the transporters than what they collected as freight from U.P. Power Corporation, citing precedents where equalized freight was allowed. The Tribunal noted that transformers are heavy products involving significant freight costs, agreed upon in the contract between the appellant and buyers. The appellant demonstrated that the actual freight incurred exceeded the amount collected from buyers, justifying interference in the case. Consequently, the Tribunal set aside the Commissioner (Appeals) order, allowing the appeal and providing consequential relief to the appellant.