The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that the freight amount is not includible in the assessable value of goods for charging excise duty.
The present appeal has been filed to assail the order by which the Commissioner has confirmed the duty demand by including the freight/insurance charges for delivery at buyer’s place in the transaction value.
The case of the department is that the freight/insurance charges collected by the appellant in addition to the price of the goods is includible in the transaction value and excise duty is chargeable on such freight/ insurance charges. Accordingly, two show cause notices were issued to the appellant and subsequently demand was confirmed by the Original Adjudicating Authority. Being aggrieved by the impugned Order, appellant is before the Tribunal.
Nimish K Oza, the Counsel appearing on behalf of the appellant submitted that the excisable goods were removed from the factory gate of the appellant. The price of the excisable goods are firm and fixed in which freight charges are not included. The Purchase order specifically provided for charges pertains to freight over and above the price of excisable goods. The freight charges shown separately in the invoices cannot be added in the assessable value.
It was also submitted that there is no evidence on record to show by the department that the said charges are nothing but, arrangement for depressing the assessable value. In absence of any such evidence the amount shown separately in the invoices as freight charges cannot be included in the transaction value.
Ajay Kumar Samota, Superintendent (AR) appearing on behalf of the revenue reiterated the finding of the impugned order.
A Two-Member Bench comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “We find that freight/insurance have been charged separately and received separately. We also take notice that the buyers of the goods Indian Oil Corporation Ltd. and Hindustan Petroleum Corp. Ltd. have issued purchase order specifying the price for the goods separately and also specifying the transportation cost for the supply of goods. Accordingly, appellant have supplied the goods and raised invoices for the price of goods and the transportation. Thus, it amounts to showing the cost of transport separately in the invoices.”
“We also find that in view of the various judgments cited by the Advocate, freight/insurance amount is not includable in the assessable value of the goods for charging excise duty” the Tribunal noted.
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