Lately one assessee requested an issue in the legal aid portion of the Excise Law Occasions [2004 (170) ELT A51] in which he requested that whether rates collected through the assessee more than the particular rates compensated through the assessee is includible in assessable value under Section 4 from the Central Excise Act? I had been surprised using the answer given and could not reconcile myself using the position taken through the Excise Law Occasions. With humbleness, this author holds as different view than was mentioned within the ELT which paper is really a humble make an effort to correct the mistake, who have happened unintentionally. Problem: Many a occasions the maker of products (Central Excise assessee) provides other services towards the buyer and expenses a sum for individuals services provided. The help might be like transportation of products towards the buyer premises, transit insurance from the goods, interest fees for that credit provided to the customer, Installing of the products within the buyer’s premises etc. It might happen that cost suffered by the maker assessee in supplying these types of services is a smaller amount than is billed through the manufacturer assessee of these services. Now you ask , whether excess charges collected through the manufacturer assessee ought to be incorporated in assessable worth of the products under Section 4 from the Act? Under Section 4 from the Central Excise Act, 1944, the Central Excise duty needs to be compensated around the transaction worth of the products. Transaction value means the cost really compensated or due for that goods, at that time and put of removal. Thus when anywhere is taken care of transportation or insurance or interest for credit or every other services, they are obligations not for that goods as well as the services supplied by the maker and therefore these charges aren’t to be incorporated within the assessable value under section 4 from the Act. Even if the total amount compensated is within excess towards the cost suffered by the maker supplier, the surplus amount is profit gained through the manufacturer in span of supplying these types of services. These earnings are not regarding the the purchase of products but regarding the the help provided and therefore this profit gained in not includible within the assessable worth of the products. In Indian Oxygen Ltd. V/s Collector of Central Excise [1988 (36) ELT 723 (SC)] the Hon’ble Top Court held that duty of Excise is really a tax on manufacturer, and never a tax around the profits produced by a dealer on transportation and therefore these profits gained aren’t includible within the assessable value. In Baroda Electric Meters Ltd. V/s Collector of Central Excise [1997 (94) ELT 13 (SC)], the Top Court confirmed this judgment and held that excess freight amount collected through the manufacturer isn’t includible within the assessable worth of the products. In Empire Ind. Ltd. V/s collector of Central Excise [1997 (95) ELT 653], the Tribunal held that profit gained inside a publish-clearance activity, that has nothing related to activity of manufacture isn’t includible within the assessable worth of the products. During this situation the tribunal came to the conclusion that excess transportation charges collected over actual cost incurred isn’t includible within the assessable value. The tribunal, within this situation, also held that interest fees collected for postponed payment through the buyer isn’t includible within the assessable value. In Sri Kaliswari Fire Work V/s Collector of Central Excise [1998 (98) ELT 93], the issue of excess rates come prior to the Tribunal, whereby it held that excess rates collected over actual suffered by the maker isn’t includible within the assessable value.
In S.R. Jhunjhunwala V/s Collector of Central Excise [1999 (114) ELT 890], the Tribunal clarified the positioning of law and held that, – It’s also discovered that the collector has held that just deduction of actual levels of transportation costs and rates are deductible under section 4 from the Act. However, this view isn’t any more good law and stands settled from the department through the Top Court judgment reported in 1997 (94) ELT 13, Baroda Electric Meters V/s Collector reported and depended upon through the learned consultants. Although the judgment worked with excess realisation of transport cost over actual, exactly the same principle is relevant towards the rates also, as they have been held to become non includible within the Top Court judgment Union asia V/s Bombay Tyre Worldwide 1983 (14) ELT 1896. The Top Court held that duty of Excise is on manufacture and never a tax on profit made on transportation. And then we hold the amount received through the appellant more than actual transportation charges suffered by them in not includible within the assessable value.- The Tribunal is after this position of law consistently and reaffirmed this view oftentimes like Gomati Engineering Works V/s CCE [1998 (27) RLT 849], in Farm Fresh Meals Pvt. Ltd. V/s CCE [1998 (113) ELT 441] as well as in numerous other cases. In recent occasions even the Tribunal declared exactly the same position of law in Transpect Industries Ltd. V/s Collector of Central Excise [2003 (162) ELT 1095], in which the tribunal held that excess freight and rates aren’t includible within the assessable value. In Appollo Tyre Ltd. Ltd. V/s CCE [2003 (160) ELT 836], the tribunal reiterated that responsibilities of excise being leviable on manufacture only and the like amounts being profits made on transportation isn’t includable within the assessable value. In Regal Auto V/s Commissioner of Central Excise [2004 (166) ELT 172], the tribunal held that freight collected more than the really freight charges incurred isn’t includible within the assessable value. Thus what the law states is well chosen this time which is being consistently then the Hon’ble Tribunal. Based on the number of these choice, it may be contended that expenses suffered by the maker and billed in the buyer, including any profit gained on the website activities aren’t includible within the assessable value. It might be noted the activity should be a publish manufacturing and publish clearance activity. Further the costs should be genuine also it should not depress the assessable value. It might be pointed out the assessee must show these charges individually in the cost from the goods. When these charges are proven individually or charged individually, the onus is around the department to determine these transactions aren’t genuine or unnaturally depressing the costs. About to onus of proof the Tribunal locked in CCE V/s Regal Auto Ltd. [2002 (146) ELT 327] in which it held, – In our situation, we’re worried about the resolution of value under Section 4 from the Behave as it had been stated by both sides. It’s settled position of law that duty of excise is really a tax around the manufacturer and never a tax around the profit produced by a dealer on transportation. The department hasn’t proven any evidence to exhibit the excess freight was only area of the worth of the products and accordingly the differential amount wasn’t includible within the assessable value.- As a result it is obvious the onus is around the department to determine that excess charges aren’t anything but a part of assessable value. However, when these charges aren’t proven individually, the onus in around the assessee to determine these are allowable deduction under Section 4 from the Central Excise Act. Cellular these, it’s recommended that the separate bill ought to be elevated for just about any other services supplied by the manufacture assessee towards the buyer from the goods.