Exclusion of Freight Charges from Assessable Value Upheld by Tribunal with Relief Granted

The Tribunal held that freight charges separately mentioned in sale invoices of excisable goods should not be included in the assessable value, following precedent that the place of removal is the factory gate. Thus, no duty can be levied on this portion. Additionally, the demand for the extended period was deemed unsustainable due to the interpretation of the value provision and lack of mala fide intention by the appellant. The impugned order was set aside, and the appeal was allowed with consequential relief.

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Issues Involved:
1. Whether the freight charged separately in the sale invoices of excisable goods is includible in the assessable value of such excisable goods.
2. Whether the demand for the extended period is sustainable.

Summary of Judgment:

Issue 1: Inclusion of Freight in Assessable Value
The primary issue in this case was whether the freight charges separately mentioned in the sale invoices should be included in the assessable value of excisable goods. The appellant argued that the place of removal is the factory gate, and thus, freight charges incurred beyond this point should not be included in the assessable value. The respondent contended that the place of removal should be the buyer's premises since the sale is completed upon delivery and acceptance by the buyer.

The Tribunal referred to the Supreme Court judgments in the cases of Commissioner of Customs Vs. Ispat Industries Ltd. and Savita Oil Technologies Ltd. which held that the factory gate is the place of removal and freight charges beyond this point are not includable in the assessable value. The Tribunal concluded that the buyer's premises cannot be considered the place of removal under Section 4 of the Central Excise Act. Therefore, the freight charges should not be included in the assessable value, and no duty can be levied on this portion.

Issue 2: Demand for Extended Period
The appellant also challenged the demand raised for the extended period, arguing that it was based on audit observations and there was no suppression of facts. The Tribunal noted that the issue involved was of interpretation of the value provision and various judgments existed on this matter. Hence, no mala fide intention could be attributed to the appellant. Consequently, the demand for the extended period was not sustainable on the grounds of limitation.

Conclusion:
The Tribunal set aside the impugned order, holding that the freight charges are not includable in the assessable value of excisable goods. Consequently, no demand of duty on freight would sustain, and the appeal was allowed with consequential relief.

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