Cce Vs. Siddha Steels Pvt. Ltd. - Court Judgment

Excerpt:

.....revenue, the impugned order has been challenged for not demanding duty on the element of freight incurred for transporting the goods (castings) manufactured by the assessee to its customer, indian railways. before the lower appellate authority the respondents had submitted that they had incurred equalized freight at the rate ranging from rs. 45/- to rs. 200/- per piece from the railways based on tender. they had indicated the details of freight incurred in the invoices submitted along with the rt12s submitted to the department. the original authority had denied the abatement of freight on the ground that documents evidencing payment of transportation charges such as lorry receipts had not been produced by the respondents. following the ratio of baroda electric meters v. cc reported in 1998 (74) ecr 721 (s.c.), the lower appellate authority vacated the demand. in the grounds of appeal, the department has taken the stand that the freight incurred was not substantiated with evidence and therefore abatement of freight collected to the tune of rs. 4,16,810/- from the assessable value was not admissible. it is also submitted that with effect from 28.9.96, the section 4 had been.....

Judgment:

1. In this appeal filed by the Revenue, the impugned order has been challenged for not demanding duty on the element of freight incurred for transporting the goods (castings) manufactured by the assessee to its customer, Indian Railways. Before the lower appellate authority the respondents had submitted that they had incurred equalized freight at the rate ranging from Rs. 45/- to Rs. 200/- per piece from the railways based on tender. They had indicated the details of freight incurred in the invoices submitted along with the RT12s submitted to the department. The original authority had denied the abatement of freight on the ground that documents evidencing payment of transportation charges such as lorry receipts had not been produced by the respondents. Following the ratio of Baroda Electric Meters v. CC reported in 1998 (74) ECR 721 (S.C.), the lower appellate authority vacated the demand. In the grounds of appeal, the department has taken the stand that the freight incurred was not substantiated with evidence and therefore abatement of freight collected to the tune of Rs. 4,16,810/- from the assessable value was not admissible. It is also submitted that with effect from 28.9.96, the Section 4 had been amended whereby the case law Indian Oxygen Ltd. v. Collector of Central Excise was no longer relevant.

3. There is no dispute that the respondent had incurred freight for transporting the goods to the buyer's premises. Revenue has no case that the respondent did not incur freight to transport its goods. As rightly held by the lower appellate authority, freight cannot be a part of the assessable value. Excise duty being a tax on manufacture, even if an assessee earned a profit by incurring a lower freight than what is collected from the customers, the differential amount cannot be subjected to excise duty as held in the Indian Oxygen Ltd. (supra). We find that this was also the ratio of the judgment of the Apex Court in Baroda Electric Meters Ltd. v. CC (supra). Respectfully following the ratio of the above decisions, we dismiss the appeal filed by the Revenue.