2016 (2) TMI 678 - AT - Central Excise

Charge of under-valuation - whether RDSO charges which have been reimbursed by the Railways are includible in the assessable value or not - Held that - The issue is based in the case laws are that if the goods are not sellable without any testing done by the assessee in that case the testing charges are includible in the assessable value as after testing/inspection the goods are marketable. But in a case where the testing has been done on a particular request by a buyer and the testing charges has been reimbursed by the buyer in such cases the testing charges are not includible in the assessable value as the goods are marketable without testing /inspection done on behalf of the buyer. The adjudicating authority is directed to ascertain from the facts of the case whether the goods are marketable without testing done by RDSO or not? If the goods are marketable without testing done by RDSO in that case the testing /inspection charges are not includible in the assessable value. If the goods are not marketable without testing done by RDSO in that case the testing/inspection charges are includible in the assessable value. The adjudicating authority shall verify the records and if required pass an order to demand duty accordingly. With these observations the appeals are disposed of.

Summary

Issues:
Charge of under-valuation based on inclusion of inspection charges by RITES but exclusion of charges by RDSO in the assessable value.

Analysis:
The appellant, engaged in manufacturing iron and steel castings, faced proceedings for under-valuation due to the exclusion of inspection charges by RDSO, reimbursed by Railways, from the assessable value. The appellant argued that goods were marketable without RDSO testing, citing precedents. However, the respondent contended that as goods were saleable post RITES testing, RDSO charges should also be included. The Tribunal noted the appellant's admission of including RITES charges in assessable value and held that RDSO charges should also be included if goods were not marketable without RDSO testing.

The key issue revolved around whether RDSO charges reimbursed by Railways should be included in the assessable value. Precedents highlighted that if goods were only marketable post-testing, charges were includible. Conversely, if testing was buyer-requested and reimbursed, charges were not includible as goods were already marketable. The Tribunal directed the adjudicating authority to determine if goods were marketable without RDSO testing. If marketable, charges should not be included; if not, charges should be added. The authority was instructed to verify records and demand duty accordingly, leading to the disposal of the appeals.