The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that excess freight collected compared to freight paid to transporter is not includable in assessable value of excisable goods.
The issue involved in the present case is that whether the excess freight collected from the customer of the excisable goods as compared to the actual freight paid to the transporter in respect of the transport of excisable goods is includable in the assessable value of their excisable goods.
The counsel for the appellant submitted that there was a clear understanding in the contract with the customers that a fixed rate of transport shall be charged in the sale invoices of excisable goods. Therefore, at times the actual freight is lesser than the fix rate of freight charged to the customer. He further submitted that this excess freight as compared to the actual one is not a consideration towards the sale of the goods but the same is profit on account of transportation only. Therefore, the same is not includable in the assessable value.
The Supreme Court in the case of Baroda Electric Meter, held that the excess rate, if any collected as compared to the equalized freight charge to the customer, the same is not a part and parcel of the price of the goods but the same is profit on account of transportation.
A Two-Member Bench comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “Accordingly, we are of the considered view that the excess freight collected by the appellant as compared to the freight paid to the transporter is not includable in the assessable value of the excisable goods. Consequently, the demand on this count shall not sustain. In the result, impugned order is set aside, appeal is allowed with consequential relief.”
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