2024 (10) TMI 884 - AT - Central Excise

'Type Test' Charges Excluded from Assessable Value; Tribunal Rules Against Additional Central Excise Duties.

M/s. Crompton Greaves Ltd. Versus Commissioner of Central Excise, Mumbai III

M/s. Crompton Greaves Ltd. Versus Commissioner of Central Excise, Mumbai III - TMI Issues: Inclusion of 'type test' charges in the assessable value under Central Excise Act, 1944.Analysis:The judgment by the Appellate Tribunal CESTAT Mumbai involved three appeals with a common issue of whether the cost of 'type test' charged by the appellant from customers should be included in the assessable value under the Central Excise Act, 1944. The original authority had held that the amount is liable to be included in the assessable value as per the Central Excise Valuation Rules. The Commissioner of Central Excise (Appeals) upheld the decision, leading to a recovery order against the appellant. The Tribunal considered the includability of 'type test' charges in the transaction value under section 4 of the Central Excise Act, 1944.The crux of the issue was whether the 'type test' charges collected from customers, even though carried out before clearance from the factory, should be considered as part of the assessable value. The central excise authorities argued that the goods do not come into existence until after the 'type test' is concluded, hence the charges should be included. However, the Tribunal disagreed, stating that the liability to duty arises upon the manufacture of transformers, even before the 'type test' is conducted. The Tribunal also noted that rule 5 of the Central Excise Valuation Rules excludes the cost of transportation and other attributable services from the value of goods for levy of central excise duties.The appellant cited precedents such as Ericsson India Pvt Ltd and HCL Infosystems Ltd cases, along with a decision by the High Court of Karnataka in Essar Telecom, to support their argument that the service tax liability precludes the inclusion of 'type test' charges in the assessable value for levy of another duty or tax. The Tribunal referred to the Ericsson India case to emphasize that if an activity has already been subjected to levy under the Finance Act, 1994, there is no justification for collecting central excise duties on the same activity. Therefore, the Tribunal found no merit in the impugned order and set it aside, ruling in favor of the appellant.In conclusion, the Tribunal ruled that the 'type test' charges collected by the appellant should not be included in the assessable value for the purpose of levying central excise duties, based on the principles of central excise valuation rules and precedents that support the exclusion of charges already subject to other tax liabilities.