2016 (3) TMI 570 - AT - Central Excise

Computation of assessable value - exclusion/ inclusion of installation/erection/commissioning charges at site of the customer - Held that - The appellant have raised two invoices one is towards sale of the machines and second for integration and commissioning of the machines supplied to the customers. Integration and commissioning is an independent activity which can be performed either by the appellant or any out side agency, charges recovered towards integration and commissioning charges is not related to the sale of the goods but it is for independent and distinct identified activity. Once the goods are fully manufactured and cleared from the factory activity of erection installation carried out subsequently the charges therefore cannot be included in the assessable value. It is not the case of the Revenue that in the light of integration and commissioning charges appellant have suppressed the sale value of the machines, but it is also not the case that value charged for the integration and commissioning is over valued therefore the amount charged for intimation and commissioning has to be accepted for the activity carried out by the appellant at site of the customers. This Tribunal in various judgments time and again held that installation/erection/commissioning charges at site of the customer is not includible in the assessable value. SEE Commissioner of C. Ex. Chandigarh Vs. Khosla Machines Pvt. Ltd 2014 (3) TMI 375 - CESTAT NEW DELHI , ) Erricsson India Pvt. Ltd Vs. Commissioner of Central Excise, Jaipur-I 2013 (8) TMI 846 - CESTAT NEW DELHI AND Commissioner of Central Excise, Nashik Vs. Kirloskar Oil Engines Ltd 2012 (5) TMI 547 - CESTAT MUMBAI . Thus it is very clear that integration and commissioning charges of the machines cannot be included in the transaction/assessable value of the machines. - Decided in favour of assessee

Summary

Issues involved:
- Whether integration and commissioning charges can be included in the assessable value of excisable machines.

Analysis:
1. The appeal challenged an Order-in-Appeal rejecting the appellant's appeal against a demand for integration/commissioning charges recovered from customers. The appellant argued that such charges were for independent activities post-manufacture and should not be part of the assessable value.

2. The appellant contended that integration/commissioning charges were separate from the sale value of machines, not excisable, and should not be included in the assessable value. The Revenue argued that all amounts related to the sale of goods should be part of the transaction value for excise duty purposes.

3. The Tribunal noted that integration/commissioning charges were distinct activities, not related to the sale of goods, and should not be included in the assessable value. Several judgments were cited supporting this view, emphasizing that post-clearance activities do not form part of the assessable value.

4. Citing various precedents, the Tribunal consistently held that charges for installation, erection, and commissioning at the customer's site should not be included in the assessable value of goods. The Tribunal allowed the appeal, setting aside the demand for integration/commissioning charges in the assessable value of the machines.

Conclusion:
The Tribunal ruled in favor of the appellant, holding that integration and commissioning charges should not be included in the assessable value of the excisable machines. The appeal was allowed, setting aside the demand for such charges. The judgment emphasized the distinction between post-manufacture activities and the sale value of goods for excise duty calculation.