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Jul 15, 2023

Transportation charges up to buyer’s premise, if included in agreed price, count towards assessable value

The CESTAT, Kolkata, in M/s Satya Megha Ispat Pvt. Ltd. v. Commissioner of Central Excise [Excise Appeal No. 71484 of 2013 dated August 04, 2023] set aside the refund rejection order and held that in

The CESTAT, Kolkata, in M/s Satya Megha Ispat Pvt. Ltd. v. Commissioner of Central Excise [Excise Appeal No. 71484 of 2013 dated August 04, 2023] set aside the refund rejection order and held that in case where the sale took place at the buyer’s premises after accepting the goods post inspection, the price charged by the assessee till the place of sale including freight, etc.

Facts:

M/s. Satya Megha Ispat Pvt. Ltd. (“the Appellant”) is engaged in the manufacturing of Ferro Silicon, MS Ingot and Runner& Risers, located in the notified area declared under Notification No.32/99-CE dated July 08, 1999 and was eligible for the exemption by way of refund of duty paid out of account current for a period not exceeding 10 years from the date of commercial production and the Appellant was availing the said benefit.

The Appellant was selling finished goods at fright on road (“FOR”) price which includes all the expenses up to the place of delivery for which the Appellant has valued the price of the finished goods including the freight element in the selling price. The Appellant paid the duty and claimed refund during the period September 2005 to June 2010 where all duty was paid in cash.

The Revenue Department (“the Respondent”) issued the show cause notice (“the SCN”) demanding back the erroneously refund claimed of INR 36,18,110/- by way of overvaluing the goods by including freight charges in the assessable value which is in violation of Rule 5 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (“the Valuation Rules”).

The Adjudicating Authority vide an order (“the Order”) confirmed the demand along with interest and penalty.

Aggrieved by the Order, the Appellant filed an appeal before the Appellate Authority who vide an order (“the Impugned Order”) confirmed the order passed by the Adjudicating Authority.

Aggrieved by the Impugned Order, the Appellant filed an appeal before the CESTAT, Kolkata for quashing the Impugned order.

Issue:

Whether transportation charges are the part of assessable value sold on a FOR basis?

Held:

The CESTAT, Kolkata, in Excise Appeal No. 71484 of 2013 held as under:

(Author can be reached at [email protected])

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