2017 (12) TMI 71 - AT - Central Excise

Valuation - erection / installation charges - Held that - there is no allegation or evidence put forth that the buyers were liable to pay to, or on behalf of assessee, by reason of, or in connection with the sale, the purported amounts alleged by the department as erection and installation charges - strictly following the interpretation of definition transaction value in Section 4 (3) (d) ibid., additions on the alleged score of erection / installation cannot be sustained. Board s clarification cannot override a legal provision of the statute. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Assessment of duty liability on erection/installation charges collected by the appellant.
2. Interpretation of the definition of "transaction value" under Section 4 (3) (d) of the Central Excise Act, 1944.
3. Application of Board's circular No.643/34/2002-CX in determining assessable value.

Analysis:
1. The case involved the appellant, a manufacturer of diesel generating sets, who had cleared inputs to the site of assembly and installation. The department alleged that the appellant collected erection/installation charges from buyers, leading to a duty liability determination of ?1,54,224 with penalties. The appellant contested, stating that they did not charge more than the invoice value and had not collected any additional charges from customers. The department's extrapolation of charges based on a single invoice was deemed unjustified.

2. The Tribunal examined the definition of "transaction value" under Section 4 (3) (d) of the Central Excise Act, 1944. It emphasized that the transaction value should be the price actually paid or payable for the goods, including any amount the buyer is liable to pay to the assessee in connection with the sale. The department failed to prove that buyers were liable to pay the alleged erection/installation charges, as no evidence indicated such collections by the appellant. The Tribunal rejected the ad hoc addition of charges without legal basis.

3. The Tribunal considered the Board's circular No.643/34/2002-CX, which the department relied on. However, it held that the circular could not override the legal provision of the statute. The Tribunal emphasized that the appellant had not collected erection/installation charges from customers, a fact unchallenged by lower authorities. It concluded that additions based on alleged charges could not be sustained, aligning with previous appellate decisions supporting this view.

In the final decision, the Tribunal set aside the impugned order, allowing the appeal and granting consequential relief as per the law. The judgment highlighted the necessity to adhere to the legal provisions and established interpretations of transaction value, ensuring fairness in duty assessments.