2004 (3) TMI 102 - AT - Central Excise

Appellate Tribunal rules customer-paid testing charges not part of assessable value. Precedents upheld.

The Appellate Tribunal CESTAT, New Delhi ruled that charges for additional testing conducted at the customer's request and paid for by the customer should ... Valuation (Central Excise) - Testing Issues involved: Whether charges for additional testing conducted at the request of the customer, and the cost of such testing borne by the customer, are includible in the assessable value of goods.Summary:The Appellate Tribunal CESTAT, New Delhi addressed the issue of whether charges for additional testing conducted at the request of the customer, with the customer bearing the cost, should be included in the assessable value of goods. The Tribunal noted conflicting views in previous cases and referred to precedents such as Hindustan Gas & Industries Ltd. and Bhaskar Industrial Development Ltd.In the case of Hindustan Gas & Industries Ltd., it was established that inspection charges not related to optional or secondary testing are part of the assessable value of goods. However, charges paid for inspection or testing by a third party at the buyer's option cannot be included in the assessable value. The Tribunal considered these principles in the current case.Regarding the issue at hand, the Tribunal referred to the case of Shree Pipes Ltd., where it was held that additional testing charges borne by the customer and optional in nature are not to be included in the assessable value of goods. This decision was upheld by the Supreme Court in subsequent appeals, setting a precedent for similar cases.Based on the established legal position, the Tribunal concluded that the cost of additional testing conducted at the customer's request and paid for by the customer should not be included in the assessable value of goods. Consequently, the appeal filed by the Revenue, arguing for the inclusion of such charges, was dismissed for lack of merit.