Custom, Excise & Service Tax Tribunal
M/S. Amrutanjan Limited vs Cce, Chennai Ii on 13 June, 2017
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/264/2007
(Arising out of Order-in-Appeal No.44/2007 (M-II) dated 9.3.2007 passed by the Commissioner of Central Excise (Appeals), Chennai)
M/s. Amrutanjan Limited Appellant
Vs.
CCE, Chennai II Respondent
Appearance Shri N. Viswanathan, Advocate for the Appellant Shri S. Govindarajan, AC (AR) for the Respondent CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri V. Padmanabhan, Member (Technical) Date of Hearing / Decision: 13.06.2017 Final Order No. 40947 / 2017 Per Bench The issue for consideration is whether the appellant is entitled for the deduction of secondary freight incurred by them from their depot to the place of delivery charged as equated (average secondary freight) in the determination of assessable value covering the period from 1.7.2000 to 31.3.2003.
2. A show cause notice was issued to the appellant alleging that they had not included the transportation charges from depot to place of delivery under Rule 5 of Central Excise (Valuation) Rules, 2000. After due process of law, the original authority vide Order-in-Original No.3/2002 confirmed the duty liability. In appeal, Commissioner (Appeals) upheld the same against which the appellant approached the Tribunal. Vide Final Order dated 25.8.2004, the Tribunal remanded the matter directing for fresh decision after giving a reasonable opportunity to the appellant to produce evidences showing whether freight had been charged to buyers under Rule 5 of the Central Excise (Valuation) Rules, 2002. In denovo adjudication, vide Order-in-Original dated 30.11.2005, the adjudicating authority disallowed the contention of the appellants and confirmed the duty demand observing that the appellant was not able to show the quantum of secondary freight in the depot invoice separately charged to the buyer in addition to the pricing for the goods as required under the said Rule. Against this order, the appellant preferred an appeal before the Commissioner (Appeals), who vide the impugned order rejected the appeal. Hence this appeal.
3. On behalf of the appellant, learned counsel Shri N. Viswanathan argued that there was a clear finding in the earlier Order-in-Original No.3/2002 dated 23.1.2002 that the appellant had produced the Chartered Accountants certificate to establish that the secondary freight mentioned in the invoices are equated freight. That the original authority, however, rejected the contention of the appellant without giving weightage to the certificate issued by the Chartered Accountant. When the freight is averaged and the authorities below are also satisfied that the same has been incurred by the appellant, the demand raised is unsustainable. Further, that it is impossible to produce proof for the incurring of the actual cost of transportation when the freight is averaged. Further, that the transaction value as defined under section 4 of the Act is for determination of the assessable value on the basis of the price at which excisable goods are sold from the place of removal and therefore should exclude the cost of transportation beyond the place of removal. He relied upon the decision of the Tribunal in the case of Bhopal Wires Pvt. Ltd. vs. Commissioner of Central Excise, Bhopal 2010 (253) ELT 681 and submitted that the Tribunal had held the said issue in favour of the assessee.
4. The learned AR Shri S. Govindarajan reiterated the findings in the impugned order. He submitted that the appellant having not produced documentary proof for incurring the transportation cost, cannot claim deduction from the assessable value.
5. We have heard the submissions made by both sides.
6. We have perused the Order-in-Original dated 23.1.2003 referred by the counsel for appellant. In para 17, the adjudicating authority has observed as follows:-
In the instant case, the assessee claims that the Secondary Freight is borne by the assessee irrespective of whether they are booked as to pay basis or on paid basis and that the said claim represented actual freight incurred on the goods supplied to stockists. Even though these claims have been duly certified by the Chartered Accountant, the assessee had not produced evidences by way of Transporters ills etc. to support their claim and to justify that the said freight amounts were the actual cost in each case. On the contrary, it is clear from the copies of the few invoices produced by the assessee that the freight amounts mentioned therein are equated freight, calculated on a particular pattern or system of pricing. This is further strengthened by the confirmation of the assessee during the personal hearing that they ensure uniform price irrespective of the quantity and place.
7. From the above, it is seen that the freight amount mentioned in the invoice are equated freight calculated at a particular pattern or system of pricing. They have also produced the certificate of the Chartered Accountant. As rightly submitted by learned counsel for the appellant, it is not practically possible for the appellant to have the equated freight showing separately in the invoices. The Tribunal in the case of Bhopal Wires Pvt. Ltd. (supra), had occasioned to consider a similar issue and held as under:-
5.2.3?Other than the Explanation 2 specifically clarifying that the cost of transport from the factory to the place of removal, in case the place of removal is other than the factory gate, is includible in the assessable value, which in any case, is a natural corollary of the provisions of Section 4(1)(a), the main difference between the Rule 5, as it stood during the period from 1-7-2000 to 28-2-2003 and as it stood w.e.f. 1-3-2003 is that the Rule 5 of the later period specifically provides for deduction of cost of transportation from the place of removal to the place of delivery even when it is charged on averaged basis. In view of this, for the period from 1-3-03 to 1-8-03, the cost of freight from the place of removal to the place of delivery, charged on averaged basis is excludible from the assessable value if it has been calculated in accordance with the generally accepted principles of costing. The Boards Circular No. 354/81/2000-TRU, dated 30-6-2000 is not applicable to the facts of this case as in this case, the freight, though on averaged basis, is separately shown in the invoices.
5.3?The question now arises as to whether during the period from 1-7-2000 to 28-2-2000, when there was no specific provision for exclusion of cost of transportation from the place of removal to the place of delivery when it is charged on averaged basis, the exclusion of such averaged freight from the assessable value can be allowed.
5.3.1?Since as per the provisions of Section 4(1)(a) as it stood during period w.e.f. 1-4-2000, the assessable value of the goods is the transaction value in respect of the sale for delivery at the time and place of removal, if the transaction value is for delivery at a place other than the place of removal, if the transportation cost from the place of removal to the place of delivery, the evidence about which has to be produced by the Assessee, has to be excluded from the assessable value. In view of this, the ratio of Honble Supreme Courts judgment in the case of UOI & Others v. Bombay Tyre International & Others (supra) with regard to the provisions of old Section 4(2) will be applicable while interpreting the provisions of Rule 5 of the Central Excise Valuation Rules, 2000, and the exclusion of cost of transportation from the place of removal to the place of delivery from the assessable value would be permissible even when such freight is charged on averaged/equalized basis. In fact, same view has been taken by this Tribunal in case of CCE, Bhopal v. Laxmi Engineering reported in 2005 (179) E.L.T. 342 (Tri.-Del.) wherein it was held that transport charges will not be includible in the assessable value when the freight from the place of removal to the place of delivery is charged on equalized basis as Rule 5 of the Central Excise Valuation Rules, 2000 nowhere provides that deduction of freight will be available only if charged on actual basis.
[Emphasis supplied] Further, in the case of Commissioner of Central Excise Vs. Laxmi Engineering 2005 (179) ELT 342 (Tri. Delhi), a similar view was taken for the transportation cost incurred by the assessee from the place of removal to the place of delivery is not to be included in determining the assessable value.
8. Following the above dictum and the ratios laid down therein as well as appreciating the evidence, we are of the opinion that the demand is unsustainable. The impugned orders are set aside. The appeal is allowed with consequential relief, if any.
(Operative portion of the order was
pronounced in open court)
(V. PADMANABHAN) (SULEKHA BEEVI C.S.)
Member (Technical) Member (Judicial)
Rex
6
E/264/2007