2008 (3) TMI 233 - AT - Central Excise

Tribunal affirms exclusion of inspection charges from Assessable Value in Cenvat credit calculation

The Tribunal upheld the Adjudicating Authority's decision, dismissing the Revenue's appeal. It was determined that inspection and transport charges were ... Whether inspection & transport charges realized by the Appellant shall form part of the Assessable Value - terms of the contract require transporting & inspection charges to be borne by the buyer and the Respondent has to only make arrangement for the same on behalf of buyers - adjudication held that the aforesaid two elements of expenditure were reimbursement expenses to the Respondent so not includible in A.V. – no contrary evidence shown by revenue – order of adjudicating authority is legal Issues:1. Whether inspection and transport charges should be included in the Assessable Value for computing reversal towards Cenvat credit.2. Interpretation of Rule 6 of Cenvat Credit Rules regarding deduction of transport and inspection charges.3. Allegation of suppression of facts by the Respondent in the documents filed before the department.Analysis:Issue 1:The appeal revolved around the inclusion of inspection and transport charges in the Assessable Value for calculating the reversal towards Cenvat credit. The Revenue contended that the Adjudicating Authority erred in allowing these charges as deductions, resulting in a gain for the Respondents. The Respondent argued that the charges were reimbursement expenses, as per the terms of the contract with Government departments under D.G.S. & D Rate Contract.Issue 2:The Revenue raised concerns regarding the interpretation of Rule 6 of the Cenvat Credit Rules. They alleged that the Adjudicating Authority failed to correctly apply the statutory provisions, leading to the reduction of the Assessable Value. However, the learned Commissioner, after thorough examination of the contracts and expenses, concluded that the inspection and transport charges were reimbursement expenses, not to be included in the Assessable Value.Issue 3:The Revenue further accused the Respondent of suppressing facts by not disclosing the separate commercial bills issued for inspection and transport charges. The Respondent, represented by learned Counsel, argued that there was no concealment, and the terms of the contract clearly stated that these charges were to be borne by the buyer, with the Respondent facilitating the arrangements.The Tribunal, after hearing both sides and examining the evidence, found no grounds to overturn the findings of the Adjudicating Authority. It was emphasized that factual findings cannot be disturbed without credible evidence proving perversity or irrationality. Consequently, the Tribunal dismissed the appeal filed by the Revenue, upholding the order of adjudication. The decision was pronounced in open court, affirming the rejection of the Revenue's claims and supporting the Respondent's position on the treatment of inspection and transport charges in the Assessable Value calculation.