2017 (7) TMI 484 - AT - Central Excise

Valuation - service charges - includibility - whether the service charges collected for storage and dispatch in the depot of the assessee is includable in the assessable value? - Held that - separate correspondence exists for providing service of storage and delivery of the goods from the depot according to the directions of AEEL; so also separate amount was paid @ 5% on such service charges by raising debit notes. That these services were provided by the assessee apart from the manufacture and sale of goods at the factory gate and therefore is not includable in the assessable value - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Inclusion of service charges in the assessable value of goods.
2. Adjustment of pre-deposit refund towards other dues without issuing a show cause notice.

Issue 1: Inclusion of service charges in the assessable value of goods:
The case involved the assessee, engaged in manufacturing fluorescent tube lights (FTL) and general lighting services (GLS), who entered contracts with other companies for manufacturing products under their brand names. The dispute arose when the department alleged that service charges collected by the assessee for storing and dispatching goods should be included in the assessable value. The Commissioner (Appeals) held that such charges need not be included as they were post-clearance services provided separately from the sale of goods at the factory gate. The Tribunal agreed, stating that since the services were additional and separate from the sale price on which duty was paid, they should not be included in the assessable value. The Tribunal dismissed the department's appeal, citing precedents and the nature of the services provided.

Issue 2: Adjustment of pre-deposit refund towards other dues without issuing a show cause notice:
The assessee had deposited a sum during the appeal proceedings, which was later refunded but adjusted towards other government dues without prior notice. The assessee contended that no show cause notice was issued before the adjustment, violating principles of natural justice. The Tribunal found that the department had not proven that the government dues were final, and thus, the adjustment was unjustified. The Tribunal set aside the order adjusting the refund towards dues, allowing the appeal with consequential relief as per law.

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