Relief to Suzuki Motorcycle: CESTAT rules Excess Amount collected from Customers not Additional Consideration to form Part of Assessable Value [Read Order]

In a major relief to Suzuki Motors, the Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that the excess amount collected from customers not additional consideration to form part of assessable value.

The appellant is engaged in the manufacture of motorcycles, scooters and sale of two-wheeler vehicles and parts thereof and was clearing the same by payment of excise duty to various dealers.

During the course of Audit, it was noticed that the appellant was not including the amount of excess freight collected from the dealers in the assessable value though this amount was collected from the buyers in connection with the sale of the motorcycles. The department alleged that the excess freight is collected from the dealers on the assessable value of goods.

The counsel for the appellant submitted that the allegation of the department that the appellant has realized the additional consideration for the excisable goods in the guise of excess freight, thus includible in the assessable value is not sustainable as there is no evidence which has been put-forth by the department to prove this allegation.

A Two-Member Bench comprising SS Garg, Judicial Member and P Anjani Kumar, Technical Member observed that “We find that in the present case, it is undisputed fact that the place of removal of excisable goods is a factory gate of the appellant. We also find that in the case of ex-factory sale, the freight amount collected is not includible in the assessable value of the excisable goods in view of the various decisions relied upon by the appellant.”

“We find that the appellant has sold the vehicles to the dealers at the ex-factory price and the title is transferred to the buyer at the factory gate and the appellant made arrangement for the transportation of vehicles on the request of the dealers. Since, the title in the vehicles is transferred at the factory gate, all the risk of damage during the transportation is that of the dealer and therefore, the assessable value is the transaction value in terms of Section 4(1)(a) of the Act and the provisions of Section 4(1)(b) and Valuation Rules are not applicable” the Tribunal concluded.

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