2018 (10) TMI 954 - AT - Central Excise

Tribunal rules testing charges are part of assessable value, grants exemption & sets aside penalties

Gees Industries Versus CCE, Jammu & Kashmir

Gees Industries Versus CCE, Jammu & Kashmir - TMI Issues: Alleged undervaluation of goods, Inclusion of testing charges in assessable value, Benefit of exemption Notification No. 56/2002-CE, Extended period of limitation, Imposition of penaltyIn this case, the appellant, a manufacturer of Transformers availing the benefit of exemption Notification No. 56/2002-CE, was alleged to have undervalued goods by not including testing charges in the assessable value. The Revenue contended that testing charges, even if reimbursed by buyers, should be part of the assessable value. The appellant argued that as they recover testing charges from buyers and act on behalf of buyers, these charges should not be included. The Tribunal noted that testing was done before clearance, and any pre-clearance activity and charges should be included in the assessable value. The Tribunal held that since buyers reimbursed testing charges and paid for the transformers, the charges were part of the assessable value, confirming under-valuation.Regarding the benefit of exemption Notification No. 56/2002-CE, the Tribunal observed that duty paid by the appellant through PLA was refundable or eligible for self-credit. As a result, the charge of mala-fide was deemed unsustainable, leading to the setting aside of demands for the extended period of limitation and no imposition of penalty on the appellant. The Tribunal directed the appellant to pay the differential duty with interest for clearances made during the limitation period, disposing of the appeal accordingly.