2009 (9) TMI 832 - AT - Central Excise

Valuation - includibility - whether the Hydraulic testing, repair and maintenance charges of cylinders and rental charges of Chlorine tankers received from parties shall form part of the assessable value? - Held that - testing, repair and maintenance is not a regular activity carried out prior to clearance. Once such peculiar fact surfaces, testing repair and maintenance charges shall not form part of assessable value of the chlorine cleared through cylinders - appeal dismissed - decided against Revenue.

Summary

The appellate tribunal CESTAT New Delhi, consisting of Shri D.N. Panda and Rakesh Kumar, JJ., heard an appeal from the Revenue against an order by the Commissioner (Appeals), Allahabad. The issue in question was whether charges for hydraulic testing, repair, and maintenance of cylinders, as well as rental charges for chlorine tankers, should be included in the assessable value. The Commissioner found that rental charges beyond the agreed free period were not connected to the sale and thus not subject to duty. Similarly, the Commissioner determined that charges for testing, repair, and maintenance of cylinders were not liable to duty as they were not related to the sale of liquid chlorine. The Revenue argued that charges for non-returned containers should be included in the assessable value, citing a Board circular, and that testing, repair, and maintenance charges were essential activities before delivery of finished goods. However, the tribunal found that the appellant was not prohibited from providing services to parties other than buyers, as indicated by an explosive license. The respondent clarified that they carried out testing, repair, and maintenance for various customers and others, paying service tax as required. The tribunal ultimately ruled in favor of the respondent, stating that testing, repair, and maintenance charges should not be included in the assessable value of chlorine, and that rental charges beyond the free period were not subject to duty. The Revenue's appeal was dismissed, rendering a cross objection irrelevant.