Transactional value

[S.C. WADHWA]

Dear Expert,

We are selling excise able goods on contract basis to one company.  Freight on dispatches is paid by selling company.  In consideration the said company reimbursing to selling company towards freight on fixed rare basis as decided in agreement for example ₹5/- per kg. The selling company booked the freight received as freight income.

Query is whether excise duty on differential amount of freight i.e freight received minus freight paid per kg or on full value of freight income booked relating to excise able items to be paid. We are not getting any cenvat and paying duty at the rate of 2.06 percent only.

Regards,

WADHWA

AI Summary

Transportation cost exclusion affects excise transaction value, excluding freight when goods are sold other than factory gate.
Rule 5 excludes the cost of transportation from transaction value where goods are sold other than at the factory gate; "cost of transportation" includes actual transport cost and averaged freight calculated by accepted costing principles. Freight charged on sales from a depot or consignment agent need not be included in the assessable value. Conversely, where goods are sold at the factory gate, freight included in the price is includible in transaction value unless shown separately on the invoice.