2015 (1) TMI 27 - AT - Central Excise

CENVAT Credit -Inclusion of testing charges in assessable value - Whether Cenvat credit of CVD on design & testing charges paid on Bill of Entry on import of mould is admissible under Cenvat Credit Rules, 2004 - Held that - appellants themselves have termed it as testing charges of the said jig, whereas the documents mention it was testing JIG Kwah T/L . On examination of documents, the crucial point remains unanswered as to why testing charges or fee has not been mentioned in same fashion as has been inked in case of design fee and as to why it has been shown separately. There is nothing on records to show that the captioned testing JIG KWAH T/L is in any way related to and is an integral part of the said imported moulds, i.e. capital goods. Merely because testing charges have been shown separately, it does not mean that these charges are not to be considered part of assessable value of the moulds and CVD levied on these charges should not be available as Cenvat Credit. - Decided in favour of assesse.

Summary

Issues:
Whether Cenvat credit of CVD on design & testing charges paid on Bill of Entry on import of mould is admissible under Cenvat Credit Rules, 2004.

Analysis:
The issue at hand pertains to the admissibility of Cenvat credit on design and testing charges paid on the Bill of Entry for importing a mould. The appellant argued that if the testing charges were not part of the assessable value of the moulds, there was no justification for these charges to be included in the assessable value and duty charged upon import. The Customs authorities had assessed the valuation of the moulds and levied applicable duties. The department did not question the assessment by Customs authorities, focusing instead on whether the testing charges formed part of the assessable value of the moulds.

The Commissioner (Appeals) highlighted that the appellants referred to the charges as "testing charges" while the documents mentioned them as "testing JIG Kwah T/L." The crucial point remained unanswered regarding why the charges were not labeled consistently with other fees and why they were shown separately. There was no evidence to establish that the "testing JIG Kwah T/L" was integral to the imported moulds as capital goods.

The Tribunal did not agree with the Commissioner (Appeals) and found merit in the appellant's argument. Merely because the testing charges were shown separately did not mean they should not be considered part of the assessable value of the moulds, making CVD levied on these charges eligible for Cenvat Credit. Consequently, the Tribunal accepted the appellant's contentions, allowing both the stay petitions and the appeal. The stay application and appeal were disposed of accordingly, with both being allowed.

In conclusion, the Tribunal's decision was in favor of the appellant, emphasizing that the testing charges should be considered part of the assessable value of the moulds, making them eligible for Cenvat Credit under the Cenvat Credit Rules, 2004.