The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) quashed the impugned order based on the extended period of limitation, as the bench was of the opinion that freight and insurance costs are not includable in the assessable value.
The main issue in this case is whether freight charges listed separately on the invoice should be included in the assessable value for excise duty and if the extended period of limitation applies.
Amber Kumrawat, the counsel on behalf of the appellant, contended that since the sale occurs at the factory gate, which is the place of removal, freight charges for transporting goods beyond that point should not be included in the assessable value.
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The counsel submitted that the demand is not sustainable due to the grounds of limitation, as the issue involved is the interpretation of the valuation provision, and thus it is clearly time-barred.
The counsel on behalf of the respondent, A R Kanani, basically reiterated the findings contained in the impugned order.
The bench observed that the invoices clearly show the basic price and freight/insurance components separately, fulfilling the requirement that transportation costs are additional to the basic price. The bench further, by considering the facts and legal provisions, was of the opinion that there is no valid reason to disallow the deduction for freight/insurance, as the sales are FOR destination.
The bench noted that by going through the sale invoices of the appellant, the sale is ex-factory as clearly mentioned in the invoice, and freight and insurance were charged separately.
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The CESTAT bench, comprising of Ramesh Nair (Member Judicial) and C L Mahar ( Member Technical), held that the impugned order is not sustainable. The tribunal bench set aside the impugned order and allowed the appeal.
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