2016 (9) TMI 93 - AT - Central Excise

Valuation - Includability - in the assessable value of the goods i.e. monoliths/signages cleared from the factory - amounts collected by the respondent as charges towards erection, installation and commissioning charges and pre-delivery inspection charges - Held that - the issue is now squarely covered by the judgment of the apex court in the case of Thermax Ltd. vs. CCE 1998 (4) TMI 134 - SUPREME COURT OF INDIA wherein it was held that the installation and commissioning charges have to be treated as assessable value of the goods supplied by the appellants are not correct, so the installation and commissioning charges could not be included in the value of the goods. Therefore, in view of the same, the impugned order is correct and legal and does not suffer from any infirmity. - Decided against the Revenue

Summary

Issues:
1. Inclusion of charges for erection, installation, commissioning, and pre-delivery inspection in the assessable value of goods for central excise duty calculation.

Analysis:
The appeal filed by the Revenue challenges an order-in-appeal regarding the inclusion of charges in the assessable value for central excise duty payment. The respondent, a manufacturer of "monoliths/signages," cleared goods during 1999-2003, collecting charges for freight, erection, commissioning, installation, and inspection. The Revenue contended that these charges must be added to the value for duty calculation. The first appellate authority set aside the order, prompting the Revenue's appeal.

The Revenue argued that the goods cleared were not monoliths but parts, and charges for erection, commissioning, and inspection should be included in the assessable value post-July 2000. They cited a Board circular supporting this position. The respondent, supported by judgments, contended that the charges were contractual extras, not attributable to manufacturing. The Tribunal analyzed sample invoices and contracts, finding that the goods were indeed monoliths and the charges were not mandatory for the respondent. Citing relevant case law, the Tribunal concluded that such charges need not be included in the assessable value.

The Tribunal referenced the Supreme Court's judgments in related cases, emphasizing that charges for installation and commissioning are not to be included in the assessable value of goods. They highlighted precedents where charges for erection and installation were deemed non-excisable. Consequently, the Tribunal upheld the order-in-appeal, rejecting the Revenue's appeal and disposing of the respondent's cross objection. The judgment clarified that such charges are not to be factored into the assessable value for central excise duty calculation.