2008 (10) TMI 516 - AT - Central Excise

Exclusion of After-Sales Service Charges in Assessable Value: Appellant Prevails

The Tribunal held that charges for after-sales services, specifically for fixing ceramic fibers, should not be included in the assessable value of Wool ... Valuation - Installation charges - Held that: - Tribunal in case of M/s. Rhino Machines (P) Ltd. v. CCE, Vadodara, [2004 (12) TMI 139 - CESTAT, MUMBAI], has held that the goods to be assessed in the form in which cleared from the factory and subsequent activities of fabrication, erection and technical supervision charges at site will not form a part of the assessable value of the goods cleared from the factory - The installation charges being a separate activity, we find no reason to hold that the same was a part of the transaction so as to include the charges collected on value of such activity in the assessable value - appeal allowed - decided in favor of appellant. Issues Involved:Whether charges collected for after-sales services should be added to the assessable value of manufactured goods.Analysis:The central issue in this appeal was whether charges collected for after-sales services, specifically for fixing ceramic fibers at customers' ends for insulation purposes, should be included in the assessable value of Wool Fibre manufactured by the appellant. The authorities below had determined that, following a change in the definition of assessable value under Section 4, these charges needed to be incorporated into the assessable value. However, the Tribunal found that the activity of lining pipes and furnaces with mounting wheels, undertaken by the appellant for certain customers, was distinct from the manufacturing process. These services were not universally provided but were only offered when requested by customers, with separate payments made for such services.Furthermore, the Tribunal referred to a previous case involving M/s. Rhino Machines (P) Ltd. v. CCE, Vadodara, where it was established that subsequent activities such as fabrication, erection, and technical supervision charges at the site should not be considered part of the assessable value of goods cleared from the factory. Similar decisions, including one involving M/s. Majestic Auto Ltd. v. CCE, supported the deduction of charges for separate activities in arriving at the assessable value. Given that installation charges were deemed a separate activity, the Tribunal concluded that these charges should not be included in the assessable value of the goods.Consequently, the impugned order was set aside, and the appeals were allowed in favor of the appellants, granting them consequential relief. This decision clarified the treatment of charges for after-sales services in the context of assessable value, emphasizing the distinction between manufacturing activities and additional services provided to customers.