By TIOL News Service

MUMBAI, JAN 07, 2016: THE CCE, Mumbai-III confirmed the CE duty demand of Rs.53,13,522/- on account of the transportation and insurance charges not being shown separately in the invoice in terms of Rule 5 of the Valuation Rules, 2000.

The case of the Revenue is that the sale is not a factory gate sale;that the delivery not being at the factory gate, valuation is to be done as per the provisions of Section 4(1)(b) read with Valuation Rules. Rule, 5, which is the applicable Rule, provides that where any excisable goods are sold in the circumstances specified in clause (a) of sub-Section (1) of Section 4 of the Act except the circumstances in which the excisable goods are sold for delivery at a place other than the place of removal, then the value of such excisable goods shall be deemed to be the transaction value, excluding the actual cost of transportation from the place of removal upto the place of delivery of such excisable goods provided the cost of transportation is charged to the buyer in addition to the price for the goods and shown separately in the invoice for such excisable goods. And, according to AR, the transportation charges are not shown separately in the invoice.

The Bench observed -

++ We find from the purchase order that the freight charges are to the buyer's account. Merely because these are not mentioned separately is no reason to conclude that sale is not complete at the factory gate.

++ The Commissioner in his Order did not reach any conclusion as to the fact of sale at the factory gate. The Commissioner only held that "… Presuming that the sale of goods is complete at the factory gate, then there was no necessity for the assessee to recover any separate charges on account of transportation and insurance cost. By recovering the amount separately from their buyers it is conclusively proved that the sale is not complete at the factory gate… "

++ We do not agree with this reasoning because, effectively, the payment for purchase in this case has been split into invoice value (for goods) and debit notes for charging transportation costs. Merely because the transport has been arranged by appellant on buyers' request and recovered from buyer through debit notes cannot be a ground for denying substantial benefit under the law laid down in Section 4. The law requires that duty is not to be paid on the transportation charges which are borne by the buyers.

The order was set aside and the appeal was allowed.

(See 2016-TIOL-73-CESTAT-MUM)