2024 (9) TMI 306 - AT - Central Excise

Tribunal Rules Transportation Charges Excluded from Alloy Steel Manufacturer's Assessable Value for Excise Duty.

The CESTAT Chennai ruled in favor of the appellant, a manufacturer of alloy steel products, regarding the exclusion of transportation charges from the ... Valuation of Excise Duty - inclusion of freight charges in the assessable value - demand raised invoking Rule 7 of Central Excise Valuation Rules, 2000 - HELD THAT:- The facts bring out that the transportation is arranged by the customer and the freight charges are also paid by the customer to the consignment agent - The very same issue was decided by the Tribunal in the appellant’s own case for a different period in [2017 (1) TMI 1407 - CESTAT, CHENNAI], the Tribunal has set aside the demand. Following the said decision, the Tribunal subsequently in the appellant’s own case [2017 (7) TMI 557 - CESTAT CHENNAI] had set aside the demand for the period December 2007 to December 2013 for other units of the appellant. Thus, there are no grounds to take a different view. Following the decision in the appellant’s own case, it is found that the demand cannot sustain. The impugned orders are set aside - appeal allowed. Issues:1. Central Excise duty valuation - Inclusion of transportation charges in assessable value.Detailed Analysis:The judgment by the Appellate Tribunal CESTAT Chennai involved the issue of Central Excise duty valuation concerning the inclusion of transportation charges in the assessable value of goods. The appellant, engaged in manufacturing hot re-rolled products of alloy steel, had been selling goods through consignment agents located outside Tamil Nadu on a stock transfer basis. The Department alleged that the appellant had not included the transportation charges in the assessable value as required by Rule 7 of the Central Excise Valuation Rules, 2000. Show Cause Notices were issued for the period from July 2010 to September 2011, proposing a demand for Central Excise duty, interest, and penalty under Rule 25 of Central Excise Rules, 2002.The appellant argued that they were not liable to include the freight charges in the assessable value since the transportation was arranged by the customer and the consignment agent collected the freight charges from the customer. The appellant referenced previous Tribunal decisions in their favor on the same issue. The Department contended that the appellant should have included the freight charges in the assessable value, as per Rule 7, which mandates determining the value based on the transaction at the consignment agent's premises at or about the time of goods removal.The Tribunal, considering the appellant's arguments and previous decisions in their favor, held that the demands raised by the Department were not sustainable. The Tribunal cited earlier orders where it was established that there was no flow back of the freight charges to the manufacturer, and thus, the assessable value declared by the appellant remained valid. Consequently, the impugned orders were set aside, and the appeals were allowed with any consequential relief.In conclusion, the Tribunal found no grounds to deviate from its previous decisions in the appellant's favor and ruled that the demands for Central Excise duty based on the inclusion of transportation charges in the assessable value were not justified. The judgment provided clarity on the interpretation and application of Rule 7 of the Central Excise Valuation Rules, emphasizing the importance of analyzing the specific circumstances of each case to determine the appropriate assessable value for duty calculation purposes.