2024 (12) TMI 403 - AT - Central Excise

Freight Charges Shown Separately on Invoice Excluded from Assessable Value under Central Excise Act, Tribunal Rules.

The CESTAT Ahmedabad ruled that freight charges, when separately shown in the invoice, are not includable in the assessable value under Section 4 of the ... Valuation of Excise Duty - inclusion of freight charges collected from customers (shown separately in Invoice) in the course of sale of excisable goods, in the assessable value for the purpose of valuation under Section 4 of Central Excise Act, 1944 - HELD THAT:- From the invoice, it can be seen that the freight amount has been shown separately and the nature of supply is ex-factory supply. Therefore, the freight is not includable in the assessable value in terms of Rule 5 of Central Excise Valuation Rules 2000. From Rule 5, it is clear that when freight is shown separately in the invoice, the same is not includable in the assessable value. Therefore, the fact of the present case is directly covered by the condition for exclusion of freight provided in Rule 5 of Central Excise Valuation Rules, 2000. Therefore, the freight in the fact of the present case is not includable in the assessable value. The demand is not sustainable. Hence the impugned orders are set aside. Appeals are allowed. Issues:Whether freight charges collected from customers should be included in the assessable value for the purpose of valuation under Section 4 of Central Excise Act, 1944.Analysis:The judgment by Appellate Tribunal CESTAT AHMEDABAD involved the interpretation of whether freight charges collected from customers, shown separately in the invoice, should be included in the assessable value for valuation under the Central Excise Act, 1944. The appellant argued that the sale was on an ex-work basis, and the freight element was recovered separately, over and above the sale price, as per the Purchase Order. The appellant relied on various judgments to support their case. The issue was whether the freight charges, when separately shown in the invoice, should be considered for valuation. The Revenue reiterated the findings of the impugned order.Upon careful consideration of submissions, the Tribunal found that the key issue was whether the separately collected freight charges should be included in the assessable value of the excisable goods. The Tribunal examined a sample invoice where the freight amount was shown separately, indicating an ex-factory supply. Referring to Rule 5 of Central Excise Valuation Rules 2000, which excludes the actual cost of transportation if charged separately and shown in the invoice, the Tribunal concluded that in the present case, the freight charges were not includable in the assessable value. The Tribunal emphasized that when freight is shown separately in the invoice, it falls under the exclusion criteria provided in Rule 5, thus not affecting the assessable value. The Tribunal noted that this issue had been settled in various judgments cited by the appellant.Consequently, the Tribunal held that the demand was not sustainable, setting aside the impugned orders and allowing the appeals. The judgment was pronounced in open court on 03.12.2024.