Custom, Excise & Service Tax Tribunal
M/S Indica Chemical Industries Pvt. Ltd vs Cce, Meerut I on 24 November, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 24/11/2015. DATE OF DECISION: 24/11/2015. Excise Appeal No. 842 and 1124 of 2007 [Arising out of the Order-in-Appeal No. 275-CE/Appeal/MRT-I/2006 dated 12/12/2006 and 23-CE/MRT-I/2007 dated 24/01/2007 both passed by The Commissioner (Appeals), Central Excise, Meerut I.] For Approval and signature : Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) 1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? M/s Indica Chemical Industries Pvt. Ltd. Appellant Versus CCE, Meerut I Respondent
Appearance Shri Rajesh Chhibber, Advocate for the appellant.
Shri Govind Dixit, Authorized Representative (DR) for the Respondent.
CORAM: Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Final Order No. 53660-53661/2015 Dated : 24/11/2015 Per. B. Ravichandran :-
These two appeals by the appellant are taken up together as they deal with same main matter.
2. The appellant are engaged in the manufacture of expanded perlite ore liable to Central Excise duty. After conducting the audit of the records maintained by the appellant, the Revenue initiated proceedings against them for short payment of Central Excise duty. On conclusion of adjudication, order dated 04/07/2005 was issued. The original authority confirmed a demand for Rs. 2,80,559/- and imposed a penalty of Rs. 1,40,000/- on the appellant. Both Revenue and appellant filed appeal against the said order. The learned Commissioner (Appeals) dismissed appellants appeal vide order dated 12/12/2006. The appeal by the Revenue to enhance the penalty was allowed by the learned Commissioner (Appeals) vide order dated 24/01/2007. The present appeals are against these two orders of learned Commissioner (Appeals).
3. The learned Counsel for appellant Shri Rajesh Chhibber, submitted that the issue involved is regarding inclusion of freight charges in the assessable value. He submitted that the goods were sold for delivery ex-factory and their case is covered by Clause (a) of sub-Section (1) of Section 4 of Central Excise Act. This fact was not rebutted by the Revenue with any evidence. The question of adding any amount towards freight does not arise in their case.
4. The learned AR Shri Govind Dixit, reiterated the findings of the lower Appellate Authority.
5. We have heard both the sides and examined appeal records. There are two points of dispute regarding the freight element in the present case. The first issue is relating to non-inclusion of freight collected separately, not shown in the invoice, to be added in the assessable value. The second issue is relating to certain amount collected, in excess of actual freight, from the buyers to be added in the assessable value. The demand of short levy was confirmed on the first issue only on the ground that the freight charges were not mentioned in the invoices and as such the assessee is liable to pay tax on this amount. We find no legal basis for such assertion. The fact that the place of removal is ex-factory as asserted by the appellant has not been disproved by adducing any evidence by the Revenue. That the appellants had arrangement for delivery of goods to the buyer after their clearance from the factory has nothing to do with the assessable value of the goods unless it is established that place of removal for valuation purpose is the delivery point at the buyers premises. No such evidence is forthcoming in this case. Similarly, the second issue is that certain amounts have been collected extra, over and above the actual freight, by the appellant and as such requires to be added in the assessable value. The appellants collected certain amount towards freight from their buyers, but actually spent less amount towards such freight. The Revenue added this excess amount in the assessable value. We find that when the goods are delivered ex-factory and the place of removal is factory gate, the freight element has no bearing on the valuation of the product. The freight amount not being shown in the invoice or some additional income has come to the appellant from freight charges cannot be the reason to add extra amounts in the invoice meant for ex-factory delivery of goods. There should be clear evidence that the invoice price for the goods for delivery at the factory gate is not reflecting the correct value and certain extra consideration is accruing to the appellant. No such evidence has been discussed in the impugned orders. In the case of CCE, Mumbai III vs. Khandelwal Laboratories Ltd. reported in 2012 (276) E.L.T. 526 (Tri. Mumbai), the Tribunal held that the contention of the Revenue that cost of transportation is allowed for exclusion only if the same is shown in the invoice is not correct. In the case of CCE, Kolkata III vs. Electro Steel Castings Ltd. reported in 2012 (278) E.L.T. 488 (Tri. Kolkata), the Tribunal held that in the absence of evidence, to the effect that there is a depreciation of price of goods by charging excess freight amount, such addition to the value is not legal tenable.
6. Considering the above discussion, we find the impugned appellate orders are not sustainable, we accordingly allow both the appeals by setting aside the impugned orders.
(Operative part of the order pronounced in the open court.) (Sulekha Beevi C.S.) Member (Judicial) (B. Ravichandran) Member (Technical) PK ??
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