The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Ahmedabad Bench ruled that the handling charges are not to be included in the Assessable Value of the Excisable Goods.
The facts of the case are that M/s Lubi Industries LLP having central excise registration are engaged in the manufacture of Power Driven Pumps (PD Pumps) and parts thereof falling under chapter 84 of Central Excise Tariff Act,1985 (5 of 1986).
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The appellant, Lubi Industries Llp have recovered the amount towards handling charges as well as inspection charges in their invoice from their buyers but the same was not included in the assessable value of the excisable goods cleared on payment of central excise duty.
The case of the department is that pre delivery inspection charges are mentioned in the provision of Section 4 of the Central Excise Act, 1944 and it was to be included in the assessable value as per board circular.
Accordingly, SCN were issued to the appellant proposing demand of Central Excise Duty. The Adjudicating Authority via order confirmed the demand of all the SCNs along with interest and imposition of penalty. Being aggrieved by the orders, the appellant filed the appeals before the Commissioner (Appeals) , who via impugned order rejected the appeals related to handling charges, however the duty demand related to pre delivery inspection charges was set aside.
Accordingly, the appeals were partly allowed. Being aggrieved by the confirmation of demand in respect of handling charges, the appellant filed the present appeals.
Shri Sudhanshu Bissa, Counsel appearing for the appellant submitted that the handling charges is not includible in the assessable value by stating the judgment of the Hon’ble Supreme Court in Accurate Meters Ltd – 2009 (235) ELT 581 (SC), Guwahati Carbon Ltd -2009 (243) ELT 307, West Coast Paper Mill Ltd – 2004 (172) ELT 496. In those cases it was held that the transportation charges of the goods even though not on actual basis are not includible in the assessable value of the goods.
The Commissioner (Appeals) has not followed these decisions and therefore grossly violated the principle of natural justice and judicial discipline, the counsel submitted.
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Shri Sanjay Kumar, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned orders.
The court observed that the limited issue to be decided is that whether the appellant charging equalized handling charges from their customers on excisable goods is includible in the assessable value for charging excise duty or otherwise.
The very issue in the appellant’s sister case i.e M/s. Mira Industries vs. CC –Ahmedabad – 2023 , under which the Tribunal has taken a view that the handling charges recovered from the customers is not to be included in the assessable value.
The CESTAT Bench comprising Ramesh Nair (Judicial Member ) and Raju ( Technical Member ) observed after considering various Supreme Court and CESTAT Judgements whose facts are similar to that of the present case,ruled that the handling charges should not be included in the assessable value of the excisable goods as stated in the previous judgements. The judgment of Mira Industries (Supra) was primarily considered by the court.
The court stated that the demand in this respect was not sustainable, and therefore, the impugned orders were modified to that extent, allowing the appeal in those terms.
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