2017 (4) TMI 553 - AT - Central Excise

Valuation - service for sold out machine - includibility - whether in respect of already sold out machines charges of servicing of the said machine, training of the operator, charges for providing assistance in plant layout and service charges for changing power voltage in the electric motor collected by the appellant are chargeable to excise duty for the valuation of their final product? - Held that - These activity are completely independent from the manufacture and sale of the machine - charges collected by the appellant from customer, whom the machines were sold long back, is not includible in the assessable value of the machine - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Whether charges of servicing sold machines, operator training, assistance in plant layout, and power voltage changes are chargeable to excise duty for valuation of final product.

Analysis:
The issue in the present case pertains to determining whether charges collected by the appellant for servicing sold machines, operator training, assistance in plant layout, and power voltage changes are subject to excise duty for the valuation of the final product. The appellant argued that these charges are not related to the sale of the machines and are independent activities. The appellant's counsel cited various judgments to support this claim, emphasizing that these charges are not excisable. Additionally, the appellant referred to a previous order where demands related to similar charges were dropped. On the other hand, the Revenue representative supported the findings of the impugned order.

Upon careful consideration of the submissions and perusal of the record, the Tribunal noted that the charges for servicing machines, operator training, and assistance in plant layout were not linked to the sale of the specific machines but constituted independent activities. Notably, the servicing was for machines sold over four years ago, making it separate from the transaction value of the sold machines. The Tribunal observed that the appellant was paying service tax on these activities, further emphasizing their independence from the manufacture and sale of the machines. Moreover, the Tribunal highlighted that in the appellant's previous case, similar appeals were allowed by the Commissioner, with no record of further challenges by the Revenue. Considering these circumstances, the Tribunal concluded that the charges collected by the appellant from customers to whom the machines were sold long ago should not be included in the assessable value of the machines. Consequently, the demand was deemed unsustainable, leading to the setting aside of the impugned order and allowing the appeal.

This detailed analysis of the judgment showcases the Tribunal's thorough examination of the issue at hand, the arguments presented by both parties, relevant legal precedents, and the ultimate decision reached based on the facts and legal principles involved.