2011 (5) TMI 523 - AT - Central Excise

Assessable value of lighting fittings - whether the charges for designing are includible in the assessable value of lighting fittings or not? - Held that - On going through the impugned Order-in-Appeal, it is found that what is mentioned as designing charges are the charges for preparing layout designs and not the charges for designing the product lighting fittings. Had there charges been for designing the final product, the same would have been includible in the assessable value. The judgments cited by the JDR are not applicable to the facts of this case as the designing charges in this case are for preparing the layout designs for light fittings ie. where the light fittings are to be installed, which do not in any manner contribute to the value of the light fittings - Decided in favour of assessee.

Summary

Issues:
Assessable value of lighting fittings including charges for designing, installation, testing, and commissioning; imposition of duty demand, penalties, and confiscation.

Analysis:
The case involved a dispute regarding the inclusion of charges for designing in the assessable value of lighting fittings. The department issued a show-cause notice demanding allegedly short-paid duty, interest, penalties, and proposed confiscation of assets. The Addl. Commissioner dropped the proceedings against the appellants. However, the department filed a review appeal to the Commissioner (Appeals), who modified the order, confirming duty demand on charges for designing and imposing penalties. The appellants challenged this decision through two appeals.

During the hearing, the Administrative Manager of the appellant argued that the designing charges were for procuring layout designs, not for designing the product itself. He contended that such charges were akin to installation, testing, and commissioning charges, which were deemed non-includible in the assessable value. On the other hand, the JDR defended the inclusion of designing charges in the assessable value, citing relevant legal precedents.

After considering the submissions and records, the Tribunal found that the disputed designing charges were for preparing layout designs, not for designing the final product. The Tribunal clarified that charges for designing the final product would be includible in the assessable value. The judgments cited by the JDR were deemed irrelevant to the case at hand. Consequently, the Tribunal set aside the impugned order, ruling in favor of the appellants and allowing the appeals.