2023 (3) TMI 1499 - AT - Central Excise

Valuation - inclusion in the assessable value - third party inspection charges incurred at the instance of the buyers and subsequently recovered from the buyers - HELD THAT - The Appellant s case is that they have submitted the customer s ledger in which the inspection charges are Sundry Debtors debited to the customer s account. The reimbursed receipts do not form part of their income and thus this is not an additional consideration. This is also relevant to observe that RITES raised the bills to the Appellant charging Inspection charges as per agreement amongst RITES the Appellant and the customer. This is variably from the records that the Inspection charges were paid to RITES by the Appellant on behalf of their customers and the same amount was reimbursed by the customers and there is no difference between the amount paid and the reimbursed receipts. Both the amounts are matching. The impugned order is set aside and the Appeal filed by the Appellant is allowed.

Summary

Issues involved: Whether third party inspection charges recovered from buyers are includible in the assessable value.

The Appellant, engaged in manufacturing various products, had inspection charges debited to customers' accounts for reimbursement, claiming it was not additional consideration. The Appellant contended that the reimbursed receipts did not form part of their income. RITES raised bills for inspection charges, which the Appellant paid on behalf of customers and were reimbursed, with no difference in amounts. Citing precedents, the Appellant argued against including these charges in the assessable value.

The Tribunal found that the key issue was whether third party inspection charges, recovered from buyers, should be included in the assessable value. The Appellant's case centered on the fact that the inspection charges were debited to customers' accounts for reimbursement, not constituting additional consideration. The Tribunal noted the matching amounts paid to RITES and reimbursed by customers, emphasizing that the reimbursed receipts did not form part of the Appellant's income. Relying on relevant decisions, the Tribunal set aside the impugned order and allowed the Appeal filed by the Appellant, granting consequential relief, if any.