Pre-delivery inspection charges at buyer's instance are excluded from assessable value under central excise valuation rules.

Inspection charges paid to an outside agency at the buyer's instance for pre-delivery inspection of excisable goods are not includible in assessable value under Section 4 of the Central Excise Act, 1944. The Tribunal applied its earlier view, already upheld by the Supreme Court, that such charges are incurred for inspection before delivery and are not part of the value of the manufactured goods. On that basis, the charges were excluded from valuation and the impugned order was set aside.

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Issues: Whether inspection charges paid to RITES by the railway authorities for inspection of the goods before delivery were includible in the assessable value under Section 4 of the Central Excise Act, 1944.

Analysis: The Tribunal followed the earlier view that such inspection charges, incurred for pre-delivery inspection of the goods manufactured under contract for the railways, were not part of the assessable value. The issue had already been decided in favour of the assessees in prior Tribunal decisions that had been upheld by the Supreme Court.

Conclusion: The inspection charges were not includible in the assessable value. The appeal was allowed and the impugned order was set aside.

Ratio Decidendi: Charges paid for inspection of excisable goods by an outside agency at the instance of the buyer, before delivery, are not includible in the assessable value under Section 4 of the Central Excise Act, 1944.

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