2009 (3) TMI 782 - AT - Central Excise

Valuation - inclusion of design and drawing charges in assessable value - Held that - The price is agreed and contracted between the assessee and their customers. The assessee have not recovered anything over and above the price contracted. There is no allegation regarding flow back of any additional consideration from the customers to the assessee. We find that the addition of the amount of 2% of the assessable value for working out the duty liability is totally subjective and imaginary and has not legal basis - appeal dismissed - decided against Revenue.

Summary

Issues:
- Inclusion of drawing and designing charges in the assessable value for Central Excise duty calculation.

Analysis:
The case involved an appeal filed by the Revenue against M/s. Maharashtra Scooter Ltd., Satara, regarding the inclusion of drawing and designing charges in the assessable value for Central Excise duty calculation. The Range Superintendent issued 17 show cause notices for demand of duty, alleging that the assessee did not include the cost of drawings/specifications in the assessable value. The Assistant Commissioner confirmed the duty and imposed a penalty, which was challenged by the assessee in an appeal to the Commissioner (Appeals).

The Revenue contended that charges for drawing and designing are directly connected with production and should be included in the assessable value. They cited judicial pronouncements supporting the inclusion of such charges. However, the Tribunal found that the 2% addition to the assessable value by the Revenue was subjective and imaginary, as there was no evidence of recovery of additional charges from customers by the assessee. The Tribunal noted that previous case laws cited by the Revenue involved situations where charges for drawing and designing were recovered from customers, which was not the case in the present matter.

Ultimately, the Tribunal upheld the order-in-appeal by the Commissioner, stating that the charges for drawing and designing were not includible in the assessable value in this particular case. The appeal filed by the Revenue was rejected, and the cross objections filed by the assessee were disposed of accordingly. The judgment emphasized the importance of considering the specific circumstances and evidence in each case when determining the assessable value for Central Excise duty calculation.