Post-clearance commissioning charges are excluded from assessable value when billed separately from machinery sale price.

Post-clearance installation, erection and commissioning charges recovered under a separate invoice were not part of the sale price or transaction value of machinery for central excise purposes. Where the goods were sold under one invoice and site work was separately billed, and there was no finding of suppression or any disguised element of machine price, the separate integration and commissioning charges had no nexus with the assessable value. The Tribunal accordingly held that such charges could not be added to value, and the demand, penalty and interest were unsustainable.

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Issues: Whether integration and commissioning charges recovered separately for post-clearance installation and commissioning of machinery are includible in the assessable value or transaction value of the goods for central excise purposes.

Analysis: The appeal turned on whether the charges recovered under a separate invoice for integration and commissioning were part of the sale price of the machinery or represented a distinct activity undertaken after clearance from the factory. The machinery was sold under one invoice and the site work was billed separately. Such installation, erection and commissioning activity could be undertaken independently and had no nexus with the value of the manufactured goods as cleared. The Tribunal also noted that there was no finding that the sale value of the machines had been suppressed or that the site charges were a disguised element of the machine price. On the settled principle that post-clearance erection and commissioning charges are not part of the assessable value, the separate site charges could not be added.

Conclusion: The integration and commissioning charges were not includible in the assessable value or transaction value of the machines, and the demand, penalty and interest were unsustainable.

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