2017 (11) TMI 1289 - AT - Central Excise

Tribunal remands case, stresses proper valuation of goods, excludes freight charges. Transportation costs impact assessable value.

M/s Bharat Petroleum Corporation Ltd. Versus CCE, ST Indore

M/s Bharat Petroleum Corporation Ltd. Versus CCE, ST Indore - TMI Issues:- Inclusion of freight charges in the assessable value of goods cleared to other Oil Marketing Companies (OMCs).- Valuation of goods sold from the depot under Rule 7 of the Central Excise Valuation Rules.Analysis:Issue 1: Inclusion of freight charges for goods cleared to OMCsThe appellant, engaged in refining and marketing petroleum products, appealed against the demand of differential duty raised by the department. The dispute revolved around whether the freight charges incurred by the appellant for delivering goods to OMCs should be included in the transaction value for payment of duty. The appellant contended that the freight charges were separately reimbursed by the buyers and were not part of the transaction value. The tribunal examined sample invoices and noted that the goods were sold ex-warehouse, with freight costs excluded from the transaction value. Relying on Rule 5 of the Central Excise Rules, the tribunal held that if goods are sold for delivery at a place other than the removal site, transportation costs should be excluded from the assessable value. Consequently, the tribunal set aside the demand related to clearances to OMCs.Issue 2: Valuation of goods sold from the depotRegarding the valuation of goods sold from the depot, the appellant argued that the depot price already included the cost of transportation from the warehouse to the depot, as per Rule 7 of the Central Excise Valuation Rules. However, the tribunal noted that the Adjudicating Authority did not verify this claim despite a previous remand for verification. The tribunal emphasized the need for proper verification and directed the appellant to provide necessary documentary evidence to substantiate their claim. Due to the lack of verification, the tribunal remanded the matter for further proceedings, instructing the Adjudicating Authority to promptly conduct the necessary verification and issue orders accordingly.In conclusion, the tribunal allowed the appeal by way of remand, emphasizing the importance of verifying claims related to the inclusion of freight charges and valuation of goods sold from the depot, ensuring compliance with the Central Excise Valuation Rules.