The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai bench has held that no Excise Duty to be levied on the surplus freight charges collected by the assessee from the customers since the same is excluded from determination of the Assessable Value for discharging the Central Excise Duty.
The assessee M/s. Concrete Products and Construction Co. is engaged in the manufacture of Concrete Sleepers. The assessee had collected higher outward freight charges from customers but paid lesser freight to the transporters.
The Commissioner of GST & Central Excise, being the respondent argued that the assessee should pay excise duty on the amount of freight charges collected from customers, not on the lesser freight paid to the transporters.
The respondent also highlighted that even though the assessee had collected inspection charges from the customers, but the Central Excise duty on the same was not paid.
The demand for excise duty was confirmed along with interest and penalties, and assessee filed an appeal challenging the same before the Commissioner (Appeals).
The Commissioner (Appeals) set aside the demand on inspection charges but confirmed the demand in respect of freight charges. Aggrieved by this, assessee preferred appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
The assessee, represented by Shri P.C. Anand argued that only the amount paid to the transporters should be included in the assessable value for discharging Central Excise duty, and the surplus freight charges collected from customers should not be considered.
The bench stated that the assessee had correctly discharged the duty on freight charges by including only the amount paid to the transporters in the assessable value, in line with the principle established in the previous court judgments.
The bench held that the surplus freight charges, which were collected from customers but not actually paid to the transporters, should not be included in the assessable value and hence not liable for excise duty.
Excise Duty is the tax on manufacture and not on profit made by a dealer on transportation, the bench clarified.
The two-member bench consisting of Ms. Sulekha Beevi C.S. (Judicial Member) and Mr. M. Ajit Kumar (Technical Member) held that the demand for excise duty cannot be sustained. Therefore, the order demanding excise duty was set aside, and the appeal was allowed with consequential reliefs, if any, as per law.
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