Assessable value under central excise excludes post-clearance transport charges and interest for delayed payment when not part of the goods' price.
Post-clearance transport and handling charges arranged after removal of glass bottles from the factory gate were held outside the assessable value under central excise, because they arose from a distinct transport activity and not from manufacture or the price of the goods; the addition was therefore unsustainable. Interest collected from buyers for credit sales and delayed payment was also excluded, as it represented a charge for delayed realisation of sale proceeds rather than consideration for the goods. On these valuation issues, the demand, penalty and confiscation order could not stand, and the appeal succeeded.
Issues: (i) Whether any part of the transport and handling charges recovered after clearance could be added to the assessable value of glass bottles for central excise purposes. (ii) Whether interest collected from buyers for delayed payment could be included in the assessable value.
Issue (i): Whether any part of the transport and handling charges recovered after clearance could be added to the assessable value of glass bottles for central excise purposes.
Analysis: The disputed charges related to transportation arranged after removal of goods from the factory gate. The activity was distinct from manufacture, and any surplus or profit earned in such post-clearance transport activity did not form part of the value of the excisable goods. In the absence of a finding that part of the genuine sale price had been deliberately diverted into transport or handling charges, no addition could be made merely because the amount recovered exceeded the actual expense incurred.
Conclusion: The transport and handling charges were not includible in the assessable value, and the finding against the assessee on this count was unsustainable.
Issue (ii): Whether interest collected from buyers for delayed payment could be included in the assessable value.
Analysis: The amount represented interest stipulated for credit sales and additional interest for delayed payment beyond the agreed credit period. Such interest was a charge for delayed realisation of sale proceeds and not part of the consideration for manufacture or sale of the goods.
Conclusion: The interest collected for delayed payment was not includible in the assessable value, and the addition made on this count was invalid.
Final Conclusion: The demand, penalty, and confiscation order could not be sustained on the valuation issues considered, and the appeal succeeded in full.
Ratio Decidendi: Post-clearance transport-related gains and interest on delayed payment are not includible in the assessable value unless they are shown to be part of the price of the excisable goods.
TaxTMI 
AI Drafter ✕
TaxTMI 
