No Excise Duty On Stowing Charges, Forest Transit Fees, Entry Tax And Other Statutory Levies: CESTAT [Read Order]

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that stowing charges, forest transit fees, entry tax, terminal tax, rural infrastructure cess, environment cess, and other similar statutory dues cannot be levied central excise duty.

The assessee South Eastern Coalfields Ltd.,was contributed in the production and removal of excisable goods and as a consequence of its business activities which incurred various charges such as stowing excise duty, forest transit fees, state entry tax, terminal tax, rural infrastructure and road development cess and environment related charges.

These were paid as statutory requirements to the State administrations or collected after the manufacture in relation to transportation or movement.

The Department issued a show cause notice to the assessee to include these charges in the transaction value under Section 4 of the Central Excise Act, 1944, on the ground that they represented a part of the consideration for sale.

The assessee stated that the impugned charges were statutory levies or post-removal expenses, and that they lacked any nexus with the manufacture of goods or the assessable value at the factory gate.

Further it was argued that such charges were neither retained by the assessee nor were they part of the price of the goods, and that they could not, therefore be included in the transaction value for excise duties.

However, the assessee submitted that central excise duty is a tax on manufacture, and that amounts collected or paid under State laws or regulatory regimes after the manufacture of goods are outside the central excise duty.

In contention the revenue submitted that since these charges were paid by the buyers, they must be part of the assessable value.

The Tribunal overruled the contentions and held that statutory levies under State laws and charges incurred after manufacture or clearance cannot be said to be equivalent to consideration for sale.

The Bench comprising Justice Dilip Gupta and P.V. Subba Rao [Technical Member],held that excise valuation cannot be widened to include all amounts remotely related to sale, particularly when such amounts are mandatorily paid under statutory compulsion and are subsequently remitted to the Government.

Accordingly, it directed to set aside the excise duty liability in its entirety, including interest and penalties.

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