1997 (7) TMI 126 - SCH - Central Excise

Supreme Court: Freight not part of assessable value for excise duty. Tribunal decision overturned.

The Supreme Court held that equalised freight cannot be part of assessable value for excise duty. The Tribunal's decision was overturned, and the appeals ... Assessable value - equalised freight - transportation charges - appropriation of freight difference - excise duty as a tax on the manufacturerAssessable value - equalised freight - appropriation of freight difference - excise duty as a tax on the manufacturer - Whether amounts collected by the appellant as equalised freight or transportation charges, and any excess of such collections over actual freight paid (appropriated difference), form part of the assessable value for excise duty. - HELD THAT: - The Tribunal accepted that the appellant charged an equalised freight to all purchasers but held that where the actual freight paid was less than the amount collected the difference was appropriated by the appellant and therefore should be included in the assessable value. The Supreme Court held that this reasoning was incorrect. The Court relied on the decision in Indian Oxygen Ltd. v. Collector of Central Excise , which establishes that excise duty is a tax on the manufacturer and not a tax on profits made by a dealer on transportation. Applying that principle, the Tribunal's conclusion that the excess collected as freight-reflecting a dealer's profit or appropriation-could be added to the manufacturer's assessable value was unsustainable. The Tribunal proceeded on an incorrect premise and its view could not be sustained in law. [Paras 1, 2]The appeals are allowed; the Tribunal's judgment holding the appropriated difference in freight as part of the assessable value is set aside.Final Conclusion: Appeals allowed; the Tribunal's finding that excess amounts collected as freight/transportation charges (the appropriated difference) form part of the assessee's assessable value is rejected and the impugned judgment is set aside. The Supreme Court held that equalised freight cannot be part of assessable value for excise duty. The Tribunal's decision was overturned, and the appeals were allowed. (Case citation: 1997 (7) TMI 126 - SC)