The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that central excise duty is not payable on freight charged separately in sale invoices of excisable goods.
The bench of Ramesh Nair (Judicial Member) and C L Mahar (Technical Member) has observed that in case of factory gate sale even though sale is on FOR basis the freight charges shown/ collected separately in the invoice shall not be included in the transaction value of excisable goods. Thus, central excise duty demand on the freight charges is not sustainable.
Background
The appellant/assessee raised the issue whether Central Excise duty is required to be paid on the freight charged separately in the sale invoices of excisable goods. In other words, whether ‘freight’ constitutes part of the transaction value of the excisable goods when shown separately in the invoice for the purpose of computation of excise duty in terms of provisions of Section 4 of the Central Excise Act, 1944 read with Central Excise Valuation Rules, 2000.
From the sample purchase order, the order acknowledgement and corresponding sales invoice it can be seen that the freight was charged separately over and above the sale price of the goods and it is also undisputed that the bill clearly shows that the goods were sold directly to the customers without taking to depot or any other place from where the goods are sold, therefore, in this fact it is ex-factory sale and the freight charges is not includible in the assessable value.
The assessee submitted that as per the terms of the sale of excisable goods, the sale is on FOR basis. However, it is ex-factory sale, therefore in the light of the various judgments the freight shown separately in the invoice is not includible in the assessable value.
Conclusion
The CESTAT relied on the decision of Supreme Court in the of Ispat Industries Limited in which it was held that amount charged as freight & handling charges and separately shown in the invoices cannot be included in the assessable value u/s 4 of the Central Excise Act, 1944. Therefore being the same facts and issue involved in the present case also, the freight and handling charges shown separately in the invoice of the appellant is also not includable in the assessable value of the excisable goods, consequently, duty demand on the elements is not sustainable.
Case Title: Gulbrandsen Technologies India Pvt. Ltd. Versus Commissioner of C.E. & S.T.-Vadodara-ii
Case No.: Excise Appeal No. 10999 of 2018 – DB
Date: 18.09.2024
Counsel For Appellant: Vinay Kansara
Counsel For Respondent: Ajay Kumar Samota
