2006 (10) TMI 52 - AT - Central Excise

Valuation(Central Excise) Department contended that the RDSO and Free service charges are included in the assessable value of locomotive manufactured by the appellant After considering the fact authority allowed the appeal with consequential relief

Summary

Issues:
1. Inclusion of RDSO charges in the assessable value of locomotives.
2. Inclusion of Free Service Charges in the assessable value.

Analysis:
Issue 1: Inclusion of RDSO charges
The appeal questioned whether the charges by RDSO for issuing certificates for moving locomotives 'on its own wheels' should be included in the assessable value. The appellant argued that the RDSO certificate is not a quality certificate but a technical clearance for movement. The certificate is issued based on locomotive size and route safety, not quality standards. The Tribunal reviewed the certificate and found it to be a Speed Certificate with instructions for movement, not quality assessment. As the charges were not related to certifying locomotive quality, they were deemed not includible in the assessable value.

Issue 2: Inclusion of Free Service Charges
The Free Service Charges were claimed to represent the cost of bought out spares accompanying the locomotives. The Tribunal cited precedents stating that the cost of bought out items should not be included in the assessable value. Consequently, the Free Service Charges were considered not liable to duty.

In conclusion, the Tribunal found no merit in the lower authority's decision and set it aside, allowing the appeal with any consequential relief. The judgment clarified the nature of RDSO charges and Free Service Charges, determining their exclusion from the assessable value of locomotives.