A manufacturing unit raises central excise invoice with basic price and central excise on the basic price. Freight is also included in the invoice but the same is not included for calculation of central excise duty. The unit has paid service tax on such freight charges levied. Now, the department says since the place of removal is buyers place, freight charges are to be included in assessable value for central excise purpose.
What is the position of law. Is payment of service tax as done by the unit is correct or the unit should have paid central excise on freight charges also, since the place of removal is buyers place or central excise duty and service tax both are applicable in this case.
Dispute Over Including Freight in Excise Duty Calculations for PSCC Poles; Resolution Suggested with Differential Tax Payment A manufacturing unit issued invoices including basic price and central excise duty, excluding freight charges from excise duty calculation, but paid service tax on freight. The tax department argues freight should be included in excise calculations since the place of removal is the buyer's location. Respondents discuss legal precedents and circulars, suggesting freight charges aren't subject to excise duty if the buyer's place isn't the removal point. The manufacturer, dealing in PSCC Poles, paid excise on the poles' price and service tax on transportation. It is suggested that the issue be resolved with the department, possibly paying differential tax and interest. (AI Summary)
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