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TMI Blog2023 (12) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... s the issue involved in both the appeals is identical, therefore, both the appeals are taken up together for discussion and disposal. 2. Briefly the facts of the present case are that 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. The sale is made at the factory gate of the Appellant to various dealers, who in turn sell it to ultimate customers. The terms and condition of sale between the Appellant and dealers are governed by dealership agreement which is on record. As per the agreement, the Appellant is liable for ex-factory sale of the excisable goods i.e., motorcycles etc., and ownership/title of the excisable goods are transferred to the dealers at factory gate of the Appellant. For arranging the transportation of vehicles, the Appellant charges separately from the dealers, which is indicated separately on the invoices. 2.1 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submits that it is a settled law that in the absence of contrary evidence, the price of the goods cleared is correct and legal and no adverse inference can be drawn. For this submission, she relied upon the following decisions:- a) Commissioner vs. Electro Steel Castings Ltd. - 2012 (278) E.L.T. 488 (Tri- Kol.) b) Indica Chemical Industries Pvt. Ltd. vs. Commr. of C. Ex., Meerut-I 2016 (335) E.L.T. 180 (Tri. - Del.) c) Dhampur Sugar Mills Ltd. vs. Commissioner of C. Ex., Meerut-II 2014 (308) E.L.T. 488 (Tri. - Del.) 3.1 She further submits that in the present case, the place of removal of excisable goods is factory gate of the appellant and the sale is an ex-factory sale and the same is not disputed by the department. She also submits that the lorry receipts and transporter's invoices are all in the name of buyer. She also submits that it is settled law that in the case of ex-factory sale, the freight amount collected is not includible in the assessable value of excisable goods. For this submission, she relied upon the following decisions:- a) Manchukonda Prakasam & Company vs. Commissioner of Central Tax, Secunderabad GST Commissionerate, Telangana 2020 (3) TMI 701 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there was no suppression on the part of the appellant. 3.5 As regards the demand of interest, the Ld. Counsel submits that the demand of interest only be sustained when demand of tax itself is confirmed. 3.6 As regard the penalty, the Ld. Counsel submits that in the present cases interpretation of law is involved and the appellant was under a bonafide belief that no excise duty was payable on the excess freight collected and therefore, there was no mens rea on their part and hence the penalty cannot be imposed. 4. On the other hand, the Ld. DR supported the impugned orders and submitted that it is undisputed fact that the appellant was charging excess amount of freight over and above the freight actually incurred for transportation during the period of dispute and they were not including the excess freight collected from the dealers in the assessable value. He further submits that the dispute whether this amount charged over and above is additional consideration for the sale of goods is includible in the assessable value as per section 4 of the Central Excise Act during the relevant period. Ld. DR thereafter referred to clause of the agreement between the appellant and its d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cited (supra). 5.1 Further, we also find that this issue is no more res-integra that the excess freight collected by the appellant from the buyer is merely a profit and no excise duty can be levied on such profit as held in the various decisions relied upon by the appellant cited (supra). 5.2 Further, 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. 5.3 We also find that the amount of excess freight recovered over and above the total cost of transportation is for totally independent activity and hence no connection with the manufacture or the sale of vehicles and therefore, there is no connection of the excess freight recovered with the transaction value of the vehicl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f transportation from the assessable value. It has been argued that the excess freight collected by the appellant from their dealers is an additional consideration flowing directly or indirectly from the latter to the former and hence should be included in the assessable value of the goods under Rule 6. The term "additional consideration" appears to be referable to the additional amount referred to in the definition of "transaction value" given under Section 4(3)(d) of the Act. This definition indicates that, in addition to the amount charged as price of the excisable goods, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with, the sale, whether payable at the time of the sale or at any other time would also be includable in transaction value. We find that the excess freight collected by the appellant from their dealers was not an amount which the dealers were liable to pay to, or on behalf of the assessee, be reason of, or in connection with, the sale inasmuch as the relevant agreement of sale did not provide for such payment, the transportation of the goods having been undertaken under a separate agreement between the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it was held that the excess amount collected from the customers cannot be considered as additional consideration to form part of the assessable value. 5.7 Further, the coordinate bench of the Tribunal in the case of Commissioner of Central Excise & Cus. BBSR-I vs. J. K. Paper Ltd. cited (supra) relying upon the decision of the Hon'ble Apex Court in the case of Baroda Electric Meters Ltd. and has held in Para 5 as under:- "5. Heard both sides and perused the record. Undisputedly the respondents are collecting/receiving 3% of the total freight turnover or the service rendered by the transporters to the buyers of respondents in transporting their finished goods from the factory till the premises of the buyers. Also, it is not in dispute that the condition of sale reflected in the respective invoices is ex-factory. The excess amount of freight collected by the transporters from the customers are passed on to the respondent also not in dispute. The issue of inclusion of excess freight is no more res integra. The Hon'ble Supreme Court in the case of Baroda Electric Meters Ltd. (supra) has held that duty of excise is a tax on the manufacture and not a tax on the profits made by a de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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