Tribunal excludes post-clearance service charges from assessable value of industrial machines

The Tribunal ruled that charges for 'erection, installation, and commissioning' should not be included in the assessable value of industrial packing machines. Citing precedents, the Tribunal held that such charges for post-clearance services are not part of the value of excisable goods. The decision overturned the lower authority's demand, interest, and penalty, stating that excise duty is on manufacture, not services post-clearance. The appeal was allowed, setting aside the impugned order, with the judgment issued on 16th November 2016.

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Issues Involved:
Inclusion of 'erection, installation and commissioning' charges in the assessable value of industrial packing machines.

Detailed Analysis:
The dispute in this appeal revolves around the inclusion of 'erection, installation and commissioning' charges in the assessable value of industrial packing machines manufactured by the appellant. The impugned order dated 31st August 2005 upheld the demand confirmed by the lower authority, along with interest and penalty. The appellant discharged duty liability on the value of clearance at the factory gate and raised a separate invoice for assembling the machines at the site. The Tribunal referred to previous decisions, such as Commissioner of Central Excise, Pune v. Nichrome Metal Works P. Ltd, and Commissioner of Central Excise, Mumbai v. Official Liquidator for Brimco Plastoc Machinery P. Ltd, to establish that charges for services offered after the manufacture and clearance of the product should not be included in the assessable value.

Furthermore, the Tribunal cited Commissioner of Central Excise, Pondicherry v. Puissane De DPK, where it was held that excise duty is on manufacture, and charges for erection and commissioning are in the nature of a service, not part of the assessable value of excisable goods. The definition of 'transaction value' in Section 4(3)(d) was also discussed, emphasizing that expenses for services like erection and commissioning should not be included in the value of excisable goods. The Tribunal disagreed with the revenue's argument, supported by previous decisions like Lakshmi Card Clothing Manufacturing Co. Ltd. v. CCE and Wadco Schlegal Automative v. CCE, stating that the position remains unchanged despite the new definition of transaction value.

Ultimately, the Tribunal concluded that assessable value does not include payments made for activities conducted after goods are cleared at the factory gate. As a result, the impugned order was set aside, and the appeal was allowed. The judgment was pronounced on 16th November 2016.

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