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M/s. Indian Sugar & General Engg. Corpn. Versus CCE, Panchkula

2016 (2) TMI 145 - CESTAT NEW DELHI

Excess amount towards freight charges recovered from the buyers than the amount actually incurred - demand central excise duty - assessable value subjected to levy - whether freight is not part of the assessable value when the sales are effected at the factory gate? - Held that:- There is no allegation to the effect that the price mentioned in the purchase orders are not true transaction value and certain extra consideration is received towards the sale of such excisable goods. Certain amount is .....

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he manufacture of goods. When the price at factory gate is available, any extra amount collected in transportation charges cannot be considered for addition. In the case of Filament India Vs. CCE, Jaipur reported in (2003 (6) TMI 110 - CESTAT, NEW DELHI ), the Tribunal held that when the sale and delivery take place at the factory gate and freight charges, which are in relation to an independent transaction is mentioned separately in the invoices, the amount of freight has no relevance for valua .....

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ri B. L. Narsimhan, Advocate For the Respondent : Shri Satyavir Singh, DR ORDER Per B. Ravichandran: The appellants are engaged in the manufacture of boilers, heat exchangers, etc. subjected to central excise levy. The Proceedings were initiated against the appellants to demand central excise duty on the ground that they have recovered more amounts towards freight charges from the buyers than the amount actually incurred by them. Such excess amount is sought to be added in the assessable value s .....

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gate. The cost of transportation of the goods from the factory gate to the buyer is excludible from the assessable value. When the place of removal for excise valuation proposed is determined to be factory gate, any amount collected towards freight for delivery of the goods to the buyer has no relevance for valuation. The Department s contention is that the appellant collected certain amount in excess of actual freight and such amount should be added to the assessable value as additional consid .....

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delivery at a place other than the place of removal. In their case, the goods are sold ex-factory. 4. During the oral submissions, ld. Counsel for the appellant pointed out the terms of purchase order to emphasize that the sale is ex factory and they undertake the transport to the buyer for which freight amount is shown separately. As an illustration, he quoted the purchase order dated 3.12.2002 of M/s. Larson & Toubro Ltd. In the said purchase order, the basic price of hydrozen reactors sha .....

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e ground that the place of delivery being at the buyers end only. In case the transportation is undertaken by the appellant, only actual freight can be excluded. He reiterated that in terms of Rule 5 of Central Excise Valuation Rules, 2000 amount which is not attributable to the freight is to be added in the assessable value. 9. Heard both the sides and examined the appeal records. 10. The question for decision is liability of the appellant for central excise duty in respect of the amount recei .....

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e alone cannot be considered for valuation, the additional amount received by the appellant in excess of the actual cost of transportation was to be considered as extra consideration to form part of the assessable value. We find that neither the Original Authority nor the first Appellate Authority have recorded clear findings to the effect that there is no transaction value available as per Section 4 (1)(a) of the Act. In the impugned order, the only observation is that the goods are sold at the .....

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er than the cost of freight mentioned in the purchase order. When the ex factory sale value is available, the place of removal being determined as ex factory, the question of adding anything over and above the said ex factory price can arise only if the transaction value is not true to the provisions of Section 4 (1)(a) and is tainted. There is no finding by the lower authorities to this effect. The only ground on which certain additions on the ex factory price was sought to be made is that the .....

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