Central Excise valuation – Return fare – Includible?
A manufacturer sends his goods to a dealer in his own transport and collects transport charges. Now the transport can be used only for a particular type of goods, say autos or cars. In the return journey, the vehicle has to come back empty as it cannot be used for transporting anything else. Now the manufacturer collects charges for the return journey also. Is this return fare includible in the assessable value?
Board in letter No.6/39/2000-CX.I dated 1.7.2002 clarified that
As per Rule 5 of the Valuation Rules the actual cost of transportation from the place of removal up to the place of delivery is only to be excluded. If the assessee is recovering an amount from the buyer towards the cost of return fare of the empty vehicle from the place of delivery, this amount will not be available as a deduction. If, however, only the cost of transportation has been indicated in the invoice without any break-up for the forward and return journey, normally it should be accepted as the cost of transportation from the place of removal to the place of delivery.
The Tribunal in the Majestic Auto case, held
Expenses incurred for the onward journey are to be allowed. There is no reason to deny the expenses incurred for return journey of those vehicles which are specially designed and which cannot carry any other goods on its return
This has been the position for the last two years. But now suddenly with no provocation, government has decided to change all that. Board has issued a draft circular which clarifies that,
As per Rule 5 of the Valuation Rules the actual cost of transportation from the place of removal up to the place of delivery is only to be excluded. If the assessee is recovering an amount from the buyer towards the cost of return fare of the empty vehicle from the place of delivery, this amount will not be available as a deduction. Therefore, unless the assessee specifically mentions in invoice that the transportation charges do not include such charges for return journey of the vehicle, the deduction of the said cost of transportation will not be admissible.
But why this sudden change of stance? There will hardly be 50 assessees in the whole country availing this facility.
Board’s draft circular