Freight charges excluded from transaction value when separately charged and invoiced for excise duty assessment

CESTAT Ahmedabad allowed the appeal regarding exclusion of freight charges from transaction value for excise duty purposes. The appellant supplied goods to buyers who issued purchase orders specifying separate prices for goods and transportation costs. Invoices clearly showed freight charges separately from basic price. Since goods were sold FOR destination delivery at customer premises rather than factory gate, and freight was charged and received separately with clear segregation in invoices, CESTAT held freight charges were deductible from assessable value. The decision followed precedent from CESTAT Mumbai in similar circumstances, setting aside the appellate authority's order that included freight in assessable value.

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Issues:
The judgment involves the issue of whether the freight charged separately in the sale invoices of excisable goods is includible in the assessable value of such goods.

Facts:
During an audit, it was noted that the appellant was clearing goods on FOR basis, collecting transportation charges separately, but not including these charges in the assessable value from 2010-11 to December 2013. A show cause notice was issued, and the demand was confirmed. The appellant appealed, which was dismissed, leading to the current appeal before the Tribunal.

Appellant's Argument:
The appellant argued that the excisable goods were removed from the factory gate, with the price of goods fixed separately from the freight charges. They cited judgments to support their position and contended that there was no evidence to show that the charges were meant to depress the assessable value. They also argued that the issue had been litigated extensively, making the extended period for demand unjustifiable.

Revenue's Submission:
The revenue reiterated the findings of the impugned order.

Tribunal's Analysis:
The Tribunal considered the submissions and examined the relevant Rule 5 of the Valuation Rules. It noted that the goods were sold for delivery at a place other than the place of removal, with the freight shown separately in the invoices. The Tribunal found that the basic price and freight components were clearly indicated separately in the invoices, meeting the criteria for allowing the deduction of transportation costs.

Decision:
The Tribunal found no valid reason to disallow the deduction for freight paid, as the sales were FOR destination. Citing precedent, the Tribunal held that the freight amount is not includable in the assessable value for charging excise duty. Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief, if any, as per law.

Conclusion:
The Tribunal ruled in favor of the appellant, holding that the freight charges separately shown in the sale invoices of excisable goods are not includible in the assessable value, thereby allowing the appeal and providing relief accordingly.

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