Custom, Excise & Service Tax Tribunal
Raj Irrigation Pipes & Fittings Ltd vs Commissioner Of Central Excise on 10 October, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. II APPEAL No.E/3355/04 (Arising out of Order-in-Appeal No.RK/244/NGP-I/2004 dated 31/08/2004 passed by Commissioner of Central Excise & Customs (Appeals), Nagpur) For approval and signature: Honble Mr. P.R. Chandrasekharan, Member (Technical) Honble Mr. Anil Choudhary, Member (Judicial) 1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether Their Lordships wish to see the fair copy :Seen of the Order? 4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================
Raj Irrigation Pipes & Fittings Ltd., Appellant Vs. Commissioner of Central Excise, Respondent Nagpur Appearance:
Shri.P.V.Sadavarte, Advocate for appellant Dr.B.S.Meena, Addl. Comm. (AR), for respondent CORAM:
Honble Mr. P.R.Chandrasekharan, Member (Technical) Honble Mr.Anil Choudhary, Member (Judicial) Date of Hearing : 10/10/2013 Date of Decision : 10/10/2013 ORDER NO Per: P.R.Chandrasekharan
1. The appeal is directed against Order-in-Appeal No.RK/244/NGP-I/2004 dated 31/08/2004 passed by Commissioner of Central Excise & Customs (Appeals), Nagpur.
2. This is the second round of litigation. During the first round, when this matter came up before this Tribunal, the case was remanded back to the appellate authority for consideration on merits. In pursuance thereof, the impugned order has been passed.
3. The facts relevant to the case are as follows:
3.1 The appellant, M/s.Raj Irrigation Pipes & Fittings Ltd. are manufacturers of PVC pipes and fittings. They supplied these pipes to various Government authorities as also to non-governmental agencies. With respect to the supplies made to the Government authorities, the appellant indicated the freight charges for the supplies separately in the invoices based on the estimates made towards the freight charges. In respect of supplies made to the private party, the appellant charged freight charges @ 4% of the value. The department was of the view that under Rule 5 of the Central Excise Valuation Rules, 2000, what is eligible to be abated is only the actual cost of transportation and not equalized freight and hence, the appellant is not eligible for the deduction of the freight. Accordingly, a duty demand of Rs.2,85,929/- was confirmed on the clearances of the goods by the appellant during the period July 2000 to August 2001. Interest on the said amount was also confirmed apart from imposition of penalties under the various provisions of law. On appeal, the Ld. Appellate authority observed that as per the chart submitted by the appellant showing the actual freight paid and that recovered from the customers, in some cases, the freight charged was more than that actually incurred whereas in some other cases it was the other way. In a few cases, the freight charged is same as that incurred. Inasmuch as in the case of private parties, it was noticed that the appellant had charged freight at a uniform rate of 4%, the lower appellate authority held that the appellant is not eligible for the abatement towards freight and hence, he has dismissed the appeal. The lower appellate authority also held that the appellant is not liable to pay excise duty on the inspection charges collected by them from the customers amounting to Rs.25,984/-. However, while imposing the penalty, he did not exclude this amount from the total demand. Aggrieved of the same, the appellant is before us.
4. The Ld. Counsel for the appellant submits that as far as Government departments are concerned, the appellant did not charge equalized freight but charged estimated freight involved. These estimates were more or less equal to the actual freight incurred by them. Only in respect of private parties, they have charged freight @ 4% of the value of the goods. Even in this case, it can be seen that there are only minor variations between the actual freight incurred and the amount charged and therefore, the demand is not sustainable in law, inasmuch as the appellant is eligible for deduction towards actual cost of transportation under Rule 5 of the Central Excise Valuation Rules. Accordingly, he pleads for setting aside the impugned order.
5. The Ld. Additional Commissioner (AR) appearing for the Revenue submits that though in the case of supplies made to Government agencies, the appellant has charged freight on an estimated basis, in respect of supplies made to private parties, he has charged freight at a uniform rate of 4% and therefore the freight charged has no nexus with the actual cost of transportation. In view of the above, the demand of duty on the freight charged at a uniform rate of 4% is sustainable in law. Accordingly, he pleads for upholding the impugned order.
6. We have carefully considered the submissions made by both the sides.
6.1 As per Rule 5 of the Central Excise Valuation Rules, the appellant is eligible for abatement of the actual cost of transportation, provided the same in shown separately in the invoices. In the present case, the appellant has shown separately the cost of transportation as far as Government supplies are concerned and the charges collected by them in majority of cases is less than the actual cost of transportation as per the chart submitted by the appellant before the lower appellate authority and therefore, the appellant has a strong case as far as Government supplies are concerned. As regards the supplies made to the private parties as per the details furnished by the appellant before the appellate authority, there is only a minor variation between the actual freight incurred and those charged in the invoices at a uniform rate of 4% of the value of the goods. All these facts need verification. In cases where the appellant has recovered lower freight charges from the customer while incurring higher charges towards the freight, the question of duty demand would not arise at all in terms of Rule 5 of the Valuation Rules. Only in cases where the freight charged is more than that actually incurred, the question of duty demand would arise. Therefore, we remand the matter back to the adjudicating authority for reconsideration of the matter afresh. The appellant is at liberty to lead evidence in support of his claim that freight that he has charged is equal to or less than that shown in the invoices raised by him. Thus the appeal is allowed by way of remand.
(Dictated in Court) (Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) pj 1 5