2024 (9) TMI 690 - AT - Central Excise

Freight and Handling Charges Excluded from Assessable Value for Excise Duty, Says Tribunal Decision.

Lubi Industries Llp Versus C.C.E. -Ahmedabad-ii

The Appellate Tribunal CESTAT Ahmedabad ruled that freight and handling charges separately shown in sale invoices are not includable in the assessable ... Determination of assessable value of excisable goods for the purpose of charging Excise Duty - inclusion of freight handling charges calculated separately and shown in the sale invoice in the assessable value - HELD THAT:- The issue in the present case is no longer res integra as decided in LUBI SUBMERSIBLES LIMITED VERSUS COMMISSIONER OF C.E. -AHMEDABAD-II AND LUBI INDUSTRIES LLP VERSUS COMMISSIONER OF C.E. -AHMEDABAD-II [2024 (5) TMI 810 - CESTAT AHMEDABAD] where it was held that 'in the present cases the handling charges is not includible in the assessable value of the excisable goods.' In view of the above decision in the appellant’s own case the issue in the present case is no longer res integra. Therefore, the demand on the freight handling charges is not sustainable - the impugned order is set aside - appeal allowed. Issues: Whether freight handling charges shown separately in the sale invoice are includable in the assessable value of excisable goods for charging Excise Duty.Analysis:The judgment by the Appellate Tribunal CESTAT Ahmedabad, delivered by Hon'ble Mr. Ramesh Nair and Hon'ble Mr. Raju, addressed the issue of whether freight handling charges separately calculated and shown in the sale invoice should be included in the assessable value of excisable goods for charging Excise Duty. The appellant's counsel referred to a previous decision by the Tribunal in the appellant's own case, emphasizing that the duty liability had been discharged based on the transaction value during the disputed period. The Tribunal examined the invoices and noted that the duty-paying documents clearly indicated the separate values for freight and handling charges. The department argued that these charges should be included in the price of goods as additional consideration, but the Tribunal held that without evidence to show these charges were meant to reduce the assessable value, they should be considered as legitimate freight and handling charges. This interpretation was supported by previous judgments, including one by the CESTAT West Zonal Bench, Mumbai, and the Supreme Court in Commissioner of Central Excise v. Accurate Meters Ltd.In a similar case, Lamina Suspension Products Pvt. Ltd. Vs. Commissioner of C.Ex. Mangalore, the Tribunal ruled that transportation costs from the place of removal to the place of delivery are not includible in the assessable value under Section 4 of the Central Excise Act, 1944. The appellant's handling charges of 1% of the value were considered part of the transportation cost and thus not subject to Central Excise duty. The Tribunal set aside the duty demand and penalty, aligning with the precedent that charges separately shown in invoices should not be included in the assessable value.Based on these precedents and the identical nature of the issue in the present case, the Tribunal concluded that the freight and handling charges separately shown in the appellant's invoice should not be included in the assessable value of excisable goods. Consequently, the duty demand on these elements was deemed unsustainable, leading to the setting aside of the impugned order and allowing the appeal. The decision was made following the principles established in various Supreme Court and CESTAT judgments, affirming that handling charges are not includible in the assessable value of excisable goods. Therefore, the impugned orders were modified accordingly, and the appeals were allowed.