CESTAT set aside the order passed by the Commissioner (Appels) and observed that the profit made on transportation charges need not be included in the assessable value and only the amount that has been paid as charges to the transporters needs to be included in the assessable value.

Brief Facts:

The appellants, manufacturers of concrete sleepers and also availing the CENVAT Credit for duty paid on inputs. It was found during the verification of records that the appellant had collected outward freight charges from their consumers and paid lesses freight to the transporters. The Department was of the view that the appellant had to pay excise duty on the amount of freight charges collected from the consumers and the demand in respect of freight charges was upheld by the Commissioner (Appeals).

Contentions of the Applicant:

The learned consultant appearing for the appellant contended that the concrete sleepers manufactured by the appellant are used by the railways for laying tracks and the appellant had entered into a contract with the railways for the manufacture and sale of railway sleepers. It was further stated that the excise duty was paid on such sleepers as per the contract value agreed between the parties and the place of removal was the factory gate and the appellant paid the outward freight charges and collected the freight amount as agreed upon by issuing commercial invoices for convenience. It was further contended that though the appellant had collected higher freight from the customer they had paid lesser freight to the transporters based on negotiations made with the transporters and a small profit was thus received by the appellant regarding freight charges. It was argued that only the amount that has been paid as charges to the transporters needs to be included in the assessable value. Reliance was made on the decision in Indian Oxygen Ltd. Vs Collector of Central Excise to argue that the profit made on transportation charges need not be included in the assessable value since excise duty is not a tax on profits, but only on the actual value of the finished goods.

Observations of the Court:

The tribunal stated that the freight charges which has been paid to the transporters have been included in the assessable value for discharging excise duty. The tribunal relied on the decision referred by the appellant in Indian Oxygen Ltd. Vs Collector of Central Excise which held that the profit made on transportation charges need not be included in the assessable value since excise duty is not a tax on profits, but only on the actual value of the finished goods.

It was further stated that the appellant had paid less freight to the transporters than what has been mentioned in the invoices and only the amount that has been paid as charges to the transporters needs to be included in the assessable value.

The decision of the Court:

The court allowed the appeal and set aside the impugned order.

Case Title: M/s Concrete Products and Construction Co. vs. Commissioner of GST & Central Excise

Coram: Hon’ble Ms. Sulekha Beevi C.S Member (Judicial) and Hon’ble Mr. Ajit Kumar, Member (Technical)

Case No.: Excise Appeal No. 41577 of 2013

Advocate for the Applicant: Mr. P.C Chand

Advocate for the Respondent: Mr. Bala Kumar

Read Judgment @LatestLaws.com

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