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Transportation reimbursements - Excise Duty payable?

Mujibur Rahman (Chartered Accountant) (37 Points)

22 June 2011

A Co. is manufacturing Excisable Goods & charging Excise Duty as per the order value received from customer.In some cases Co. receives reimbursement of Transport Charges paid for transportation of the goods at Customer site. The question is whether Excise Duty is also chargeable on the transport charges reimbursed from the Customer? Please give relevant sections/Rules/cases etc.

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10 Replies

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 22 June 2011

when goods are cleared at factory gate, such charges are not to be added in invoice, separate debit note may be issued for forwarding charges, if any,

but when the point of clearance is destination, i.e the commercial invoice is made FOR destination, then such transportation is integral part of assessable value, and duty is payable on such charges. ( also such GTA services availed are liable for service tax payment)

1 Like

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 22 June 2011

AGREE WITH US SHARMA

1 Like

Deepak Kumar Singh (Incharge - Commercial) (38 Points)
Replied 05 July 2011

Sir,

Sorry but I have made a mistake while Invoicing I have added Freight amount in the Excise Invoice. I too get reimbursement from the Purchaser and the Price given to us is FOR

CA,CS Mehul Bhanawat (Job) (204 Points)
Replied 11 July 2011

According to me this case is about goods are sold at factroy gate and transportaion is arranged for the buyer so Rule 5 is not applicable here.

IN THIS if invoice clearly shows the price at which the the impugned goods are sold at factory gate and the freight has been indicated seperatly ,then the A.V . is determined under section 4 of the Act

As judicially decided under "HALDIA PETROCHEMICAL LTD. V. CCEx. 2009"(TRI-KOLKATA)

it clearly evident from this case that co transfered risk and reward at factory gate merly goods are transported by co to customer primises and chages given back by customer shall not made applicable Rule 5....

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 11 July 2011

RULE 5. 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 cost of transportation from the place of removal up to the place of delivery of such excisable goods.
Explanation 1. - “Cost of transportation” includes -
(i) the actual cost of transportation; and
(ii) in case where freight is averaged, the cost of transportation calculated in accordance with generally accepted principles of costing.
Explanation 2. - For removal of doubts, it is clarified that the cost of transportation from the factory to the place of removal, where the factory is not the place of removal, shall not be excluded for the purposes of determining the value of the excisable goods.

https://www.cbec.gov.in/excise/cxrules/cx-rules-valuation.htm

CA,CS Mehul Bhanawat (Job) (204 Points)
Replied 13 July 2011

What is correct in your opinon......

as in that particular case Rule 5 applies or not ....

CA,CS Mehul Bhanawat (Job) (204 Points)
Replied 13 July 2011

What is correct in your opinon......

as in that particular case Rule 5 applies or not ....

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 13 July 2011

the query did not mentioned the method of accounting of transportation charge in invoice, and also did not mentioned the "terms of delivery" if its ex works delivery then not to be added, but if its FOR destination delivery then surely to be added.