CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL,
WEST ZONAL BENCH : AHMEDABAD
REGIONAL BENCH – COURT NO. 3
EXCISE Appeal No. 11361 of 2014-DB
[Arising out of Order-in-Original/Appeal No VAP-EXCUS-000-APP-439-440-13-14 dated 03.01.2014 passed by Commissioner of Central Excise, Customs and Service Tax-VAPI]
Kashyap Sweetners Limited
VERSUS
Commissioner of Central Excise & ST, Vapi
WITH
EXCISE Appeal No. 11360 of 2014-DB
[Arising out of Order-in-Original/Appeal No VAP-EXCUS-000-APP-439-440-13-14 dated 03.01.2014 passed by Commissioner of Central Excise, Customs and Service Tax-VAPI]
Jitendra Pandey …. Appellant
Commercial Manager Cum Authorized Signature, Kasyap Sweetners Ltd Plot No. 20 B & C, Phase-i, GIDC, VAPI, GUJARAT
VERSUS
Commissioner of Central Excise & ST, Vapi Respondent
4th Floor Adharsh Dham Building, Opp. Town Police
Station, Vapi-Daman Road, Vapi, Gujarat-396191
AND
EXCISE Appeal No. 11362 of 2014-DB
[Arising out of Order-in-Original/Appeal No VAP-EXCUS-000-APP-441-442-13-14 dated 03.01.2014 passed by Commissioner of Central Excise, Customs and Service Tax-VAPI]
Kashyap Sweetners Limited …. Appellant
Plot No. 20 B & C, Phase-i, GIDC, VAPI, GUJARAT
VERSUS
Commissioner of Central Excise & ST, Vapi Respondent
4th Floor Adharsh Dham Building, Opp. Town Police
Station, Vapi-Daman Road, Vapi, Gujarat-396191
APPEARANCE :
Shri Mehul Jiwani, Chartered Accountant for the Appellants
Shri Rajesh Nathan, Assistant Commissioner, (AR) for the Respondent
CORAM: HON’BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) HON’BLE MR. C.L. MAHAR, MEMBER (TECHNICAL)
DATE OF HEARING : 22.06.2023 DATE OF DECISION: 24.07.2023
FINAL ORDER NO. 11559-11561/2023 RAMESH NAIR :
The issue involved in the present case is that whether the excess amount collected from the customers over and above the actual freight is liable to be added in the assessable value/ transaction value for the purpose of charging excise duty or otherwise.
- Shri Mehul Jiwani, learned Chartered Accountant appearing on behalf of the appellant submits that firstly, the freight as a whole in not includable in the transaction value from the place of removal to place of delivery. In support, he placed reliance on the following judgments:-
- M/SIspat Industries Limited 2015 (324) L.T. 670 (S.C.)
- GPPetroleums Limited 2019 (5) TMI 1018 CESTAT Ahmedabad
- EmcoLimited – 2016 (12) TMI 1385 – CESTAT Mumbai
- MirajPipes & Fittings Ltd. 2019 (7) TMI 1792 CESTAT New Delhi
- Order A/10755/2022 Dated 30/06/2022 Passed By CESTAT Ahmedabad in case of Savita Oil Technologies Limited
- without prejudice he further submits that even if freight is includable in the transaction value for the purpose of charging duty, excess freight collected over and above the actual freight paid to the transporter is nothing but on account of profit on transportation and the same is not part of the transaction value of the goods, therefore the same is not includable in the assessable value. He placed reliance on the following judgments:-
- BarodaElectric Meters – 1997 (94) LT 13 (SC)
- MercedesBenz India Limited – 2010 (260) E.L.T. 149 (TRI. Mumbai)
- Jost’sEngineering Limited. 2017 (8) TMI 213 CESTAT MUMBAI
- BalkrishnaPaper Mills Limited. – 2018 (5) TMI 300 CESTAT Mumbai
- M/S.Marpol Pvt Limited – 2017 (2) TMI 247 CESTAT Mumbai
- Transformersand Rectifiers (India) Limited – 2021 (8) TMI 759 CESTAT
- IndoAmines Limited – 2018 (11) TMI 489 CESTAT Mumbai
- IndianOil Corporation Limited – 2013 (291) ELT 449 (Tri. )
- Indian Sugar & General Engg. Corpn. – 2016 (333) E.L.T. 109 (Tri. )
- PRSRolling Mills Pvt. Limited – 2012 (281) L.T. 560 (Tri-Del)
- He further submits that this issue has been decided in the appellant’s own case for the other unit, in their favour and the said order has not been reviewed by the department and thus attained finality. Thus, department cannot be permitted to take contrary stand in the subsequent cases. In this support, he placed reliance on the following cases:-
- SurcoatPaints (P) Limited – 2008 (232) 4 (S.C.)
- SuntrackElectronics (P) Limited – 2003 (156) L.T. 163 (S.C.)
- JayaswalsNeco Limited – 2006 (195) LT. 142 (S.C.)
- BirlaCorporation Limited – 2005 (186) L.T. 266 (S.C.)
- Without prejudice he further submits that there is not only cases of excess recovery of freight but there are cases where the appellant have paid excess freight and collected from the customer the lesser amount of freight as compared to the actual. He submitted a chart which is reproduced below:-
| Year | Freight Excess payment to appellant considered in SCN. | Freight short
payment to appellant by the customers |
Net Excess/ short
recovery of freight |
| April 2011 to
October 2011 |
43,06,483/- | –35,64,561/- | 7,41,922/- |
| November 2011 to
March 2012 |
33,97,141/- | -30,13,955/- | 3,83,186/- |
| Total | 77,03,624/- | -65,78,516/- | 11,25,108/- |
He submits that despite the clear figures given above, the Adjudicating Authority has not considered the transactions where the lesser freight was collected from the customers. It is his submission that overall the demand should be on the net difference of excess freight and lesser freight collected from the customers.
- Shri Rajesh Nathan, learned Assistant Commissioner, (AR) appearing for the Revenue reiterates the findings of the impugned order.
- We have carefully considered the submissions made by both the sides and perused the record. We find that limited issue to be addressed is whether the excess paid freight as compared to the actual should be included in the transaction value for the purpose of charging excise duty. This issue is no longer res-integra as held by the Hon’ble Supreme Court in the case of Baroda Electric Meters (supra) which is reproduced below:-
“[Order]. – The Tribunal accepted the position that equalised freight was charged by the appellant from everyone, but proceeded to say that even though freight cannot be a part of the assessable value that wherever freight actually paid was less than the amount collected by way of freight and transportation charges the difference was appropriated by the appellant and, therefore, the same would be a part of the assessable value. In our opinion, the Tribunal proceeded on an incorrect premise. It was clearly held in Indian Oxygen Ltd. v. Collector of Central Excise – 1988 (36) E.L.T. 723 (S.C.) = 1988 (Supp.) SCC 658, that the duty of excise is a tax on the manufacturer and not a tax on the profits made by a dealer on transportation. In view of that decision, the view taken by the Tribunal cannot be sustained.
- Consequently, the appeals are allowed and the impugned judgment of the Tribunal is set aside.”
- As held in the above judgment by the apex court that excess amount of freight from the customer is profit on account of transportation and not part and parcel of the value of the goods therefore, same cannot be included in the assessable value. We observe that this judgment was given with reference to un-amended Section 4 and Rules made thereunder prior to 01.07.2000. However, in the identical case for the period post 01.07.2000, in various judgments a view was taken that the Baroda Electric Meters (supra) prevails even after amended Section 4 and Rules made thereunder after 01.07.2000.
- Accordingly, In view of the various judgments cited by learned Chartered Accountant, excess freight collected by the appellant from the customers shall not be included in the transaction value for charging excise duty. Since we have decided the matter on the merits of the case, we are not going to address various alternate submissions made by learned Chartered Accountant. Accordingly, the impugned orders are set-aside and the appeals are allowed.
(Pronounced in the open court on 24.07.2023)
(Ramesh Nair) Member (Judicial)
(C L Mahar) Member (Technical)
KL
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