In Excise Appeal No.41577 of 2013 - CESTAT - Surplus freight charges excluded from assessable value for Central Excise Duty: CESTAT (Chennai)
Members Sulekha Beevi C.S. (Judicial) & M. Ajit Kumar (Technical) [01-06-2023]

Read Order: Concrete Products and Construction Co v. Commissioner of GST & Central Excise

Chahat Varma

New Delhi, June 3, 2023: The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal has ruled that surplus freight charges collected from customers are not required to be included in the assessable value for the purpose of discharging Central Excise Duty.

Briefly stated facts were that Concrete Products and Construction Co. (appellants), engaged in manufacture of Concrete Sleepers, were availing CENVAT Credit facility of duty paid on inputs. On verification of records, it was found that the appellant had collected outward freight chargers from their customers and paid lesser freight to the transporters. They had included only the lesser freight in the assessable value while discharging the excise duty on finished products. The Department was of the view that the appellant had to pay excise duty on the amount of freight charges collected from the customers and not on the lesser freight paid to the transporters.

The bench of Sulekha Beevi (Judicial) and M. Ajit Kumar (Technical) referred to the case of Indian Oxygen Ltd. v. Collector of Central Excise [LQ/SC/1988/353], wherein Supreme Court held, “It is clear from Section 4 that the delivery and collection charges have nothing to do with the manufacture as they are for delivery of the filled cylinders and collection of the empty cylinders. These charges have to be excluded from the assessable-value. Insofar as the loading charges incurred for loading the goods within the factory are concerned, they are to be included in the assessable value, irrespective of who has paid for the same but the loading expenses incurred outside the factory gate are excludible. Duty is excise to a tax on the manufacture, not a tax on the profits made by a dealer on transportation.”

Consequently, the bench held that the demand cannot be sustained.