2016 (2) TMI 454 - AT - Central Excise

CESTAT Mumbai: Charges for erection not part of assessable value for Central Excise Duty

M/s Ultraseal India Pvt Ltd Versus Commissioner of Central Excise, Pune

The Appellate Tribunal CESTAT Mumbai ruled in favor of the appellant in a case concerning the demand of Central Excise Duty for the period 14/08/2002 to ... Demand of Central Excise Duty - for the period 14/08/2002 to 30/06/2003 - denial on the ground that they had undervalued the goods cleared by them - Held that:- The issue is no more res-integra as the Apex Court in the case of Thermax Limited (1998 (4) TMI 134 - SUPREME COURT OF INDIA) has settled the law that installation commissioning charges for installation of Boilers at customer's premises is not includable in assessable value. This ratio is followed by Tribunal in the case of Nichrome Metal Works P. Ltd. [1999 (11) TMI 583 - CEGAT, MUMBAI] Revenue authorities have erred in demanding of Central Excise Duty on the amount received by the appellant for erection and commissioning of the equipment at their customer's place. - Decided in favour of assessee Issues involved:Demand of Central Excise Duty for the period 14/08/2002 to 30/06/2003 based on alleged undervaluation of goods cleared by the appellant.Analysis:The judgment by the Appellate Tribunal CESTAT Mumbai pertains to an appeal against Order-in-Appeal No. P-I/153/2005 dated 20/04/2005. The central issue in this case revolves around the demand of Central Excise Duty from the appellant for the period 14/08/2002 to 30/06/2003. The demand was made on the grounds that the appellant had allegedly undervalued the goods cleared by them. Specifically, the dispute arose regarding the inclusion of charges for erection and commissioning of machinery at the customer's premises in the assessable value for Central Excise Duty purposes.The appellant had cleared various machinery falling under chapter 84 and had separately charged for erection and commissioning services provided at the customer's premises. The revenue authorities contended that these charges should be included in the assessable value for Central Excise Duty calculation. However, the appellant argued that such expenses were post-clearance activities at the customer's request and should not be considered part of the assessable value.The Tribunal referred to the decision of the Apex Court in the case of Thermax Limited, which established that installation and commissioning charges for machinery at customer premises are not to be included in the assessable value for Central Excise Duty. This legal principle was further reinforced by the Tribunal's decision in the case of Nichrome Metal Works P. Ltd. Based on these precedents and legal interpretations, the Tribunal concluded that the revenue authorities had erred in demanding Central Excise Duty on the charges for erection and commissioning services.Therefore, the Tribunal held that the impugned order demanding Central Excise Duty was unsustainable and set it aside. The appeal was allowed in favor of the appellant, emphasizing that the charges for erection and commissioning services should not be considered part of the assessable value for Central Excise Duty calculation.