2005 (8) TMI 14 - AT - Central Excise

Assessable value Inclusion in Transaction value - Quality control test charges where test conducted on request from customer

Summary

Issues:
1. Whether Quality Control Test charges are required to be added in the assessable value as per the Revenue's requirement.
2. Impact of the amendment to the term "Transaction Value" from 01.07.2000 on the inclusion of Quality Control Test charges.

Issue 1:
The appellant, a PSU unit, contested the Revenue's demand to include Quality Control Test charges in the assessable value, arguing that such charges do not form part of the transaction value as the ex-works price, freight, and insurance charges were already determined in the contract. The appellant relied on various judgments, including those in the cases of Shree Pipes Ltd. Vs. CCL, CCE, Raipur Vs. Bhaskar Ispat Pvt. Ltd., Electrosteel Castings Ltd. Vs. CCE, and CCE Vs. A. Infrastructure Ltd. The Tribunal, after considering the submissions and the cited judgments, concluded that the optional Quality Control Test, initiated by customers after the manufacturing activity, should not be considered part of the manufacturing process or the transaction value. The Tribunal's decision was influenced by previous rulings in cases such as Grasim Industries Vs. CCE, Indore, and Volvo India Ltd. Vs. CCE, Bangalore, which were based on the Apex Court's judgment in the case of CCE Vs. Acer India Ltd.

Issue 2:
The learned SDR defended the Revenue's stance, highlighting the amendment to the term "Transaction Value" from 01.07.2000. However, the Tribunal, after analyzing the factual position and the impact of the amendment, held that the Quality Control Test, being optional and customer-initiated, did not fall within the scope of the amended term "Transaction Value." The Tribunal emphasized that the test was not part of the manufacturing activity and should not be included in the assessable value. By following the precedents set in cases like Grasim Industries and Volvo India Ltd. in alignment with the Apex Court's judgment in CCE Vs. Acer India Ltd., the Tribunal ruled in favor of the appellant, setting aside the impugned orders and allowing the appeals with any consequential relief.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Bangalore illustrates the considerations and legal reasoning applied to resolve the issues raised regarding the inclusion of Quality Control Test charges in the assessable value post the amendment to the term "Transaction Value."