The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that excess freight collected from customers is not includable in transaction value for charging excise duty.
Shri Mehul Jiwani, Chartered Accountant appearing on behalf of the appellant, Kashyap Sweeteners Limited submitted that firstly, the freight as a whole is not includable in the transaction value from the place of removal to the place of delivery.
Further submitted that there are not only cases of excess recovery of freight but there are cases where the appellant has paid excess freight and collected from the customer the lesser amount of freight as compared to the actual.
the Adjudicating Authority has not considered the transactions where the lesser freight was collected from the customers. It is his submission that overall the demand should be on the net difference between excess freight and lesser freight collected from the customers.
Shri Rajesh Nathan, Assistant Commissioner, (AR) appearing for the Revenue reiterated the findings of the impugned order.
In the case of Baroda Electric Meters (supra), the apex court held that the excess amount of freight from the customer is profit on account of transportation and not part and parcel of the value of the goods therefore, the same cannot be included in the assessable value.
The two-member bench comprising Mr Ramesh Nair, Member (Judicial) and Mr C L Mahar, Member (Technical) held that “excess freight collected by the appellant from the customers shall not be included in the transaction value for charging excise duty.”
The CESTAT set aside the impugned orders and allowed the appeals.
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