2017 (9) TMI 1365

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....rom their customers under the garb of freight & insurance charges on sale of the excisable good to their customers as FOR destination sales, resulting in undervaluation of the said goods for the period from December, 2007 to September, 2007. The matter was adjudicated and the demand along with interest and equivalent amount of penalty was confirmed. In appeal, the order of the adjudicating authority was upheld. Aggrieved from the same, the appellant have filed this appeal. 2. Learned Advocate for the appellants submits that the appellant are supplying the goods to various steel plants on ex-factory basis and on the excise duty discharged on agreed ex-factory price. For this purpose, he invited our attention to their contract at page 57 o....

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....dmitted in the Supreme Court. 4. Heard the parties and perused the records. 5. We find that the department has proceeded on the basis that the contracts are on FOR basis. However, on examination of one of the appellants contract available on record with Bhilai Steel Plant, we find that the contract is on ex-works basis. We also find that as per the contract the transportation and insurance are billed by the supplier on the buyer. From the invoices, it is evident that the freight and transportation are separately indicated and excise duty is collected on the basic value excluding the freight and insurance. We also find force in the contention of the appellant that the demand has not been raised the department on the entire amount of f....

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....ated on the basis of Section 4(1)(a) i.e. the sale price of goods charged at the factory gate. Admittedly, on that price the excise duty have been paid. Merely because the appellant has made profit on transportation from the place of removal to the place of delivery, it cannot be said that the aforesaid profit has any co-relation with the goods cleared to factory gate as such he cannot be asked to pay excise duty on the freight. In our aforesaid view we are supported by the judgment of the Supreme Court in Baroda Electric Meters Ltd. v. C.C.E. (supra) where it was held that the equalized freight charged from everyone freight actually paid less than the amount collected by way of equalized freight, differential amount not includible in the ....