2018 (2) TMI 899 - AT - Central Excise

Valuation - includibility - service charges for testing their cylinders to check the level of vacuum and clean the cylinders for servicing, painting and changing the values etc - Department was of the view that the aforesaid charges collected is an additional consideration which needs to be included in the transaction value in terms of Rule 6 of the Central Excise Valuation Rules 2002 read with Section 4 of the CEA 1944 - Held that - the identical issue has been referred by the Hon ble Supreme Court to its Larger Bench as reported in the case of Commissioner of Central Excise, Indore Vs. Grasim Industries Ltd. 2016 (4) TMI 794 - SUPREME COURT . Liberty is granted to the Revenue to approach this Tribunal again after having the final wording of the Larger Bench of the Apex Court, within the prescribed time - Appeal disposed off.

Summary

Issues:
1. Inclusion of service charges in transaction value under Central Excise Valuation Rules.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Bangalore arises from a dispute regarding the inclusion of service charges collected by the appellant in the transaction value under the Central Excise Valuation Rules. The respondents, engaged in the manufacture of Industrial Gases and medical grade oxygen, had entered into agreements with their customers for the supply of gases. The charges in question were collected for testing cylinders, servicing, painting, and other related activities. The Department contended that these charges constituted additional consideration to be included in the transaction value as per Rule 6 of the Central Excise Valuation Rules 2002 and Section 4 of the Central Excise Act 1944.

Upon hearing arguments from both sides and examining the records, the Tribunal noted that the issue at hand had been referred to the Larger Bench of the Supreme Court in a prior case involving similar circumstances. Citing the case of Commissioner of Central Excise, Indore Vs. Grasim Industries Ltd., the Tribunal acknowledged the need to await the final decision of the Larger Bench before making a conclusive ruling on the matter. Consequently, the Tribunal granted liberty to the Revenue to reapproach the Tribunal once the final decision of the Larger Bench was available, within the stipulated timeframe.

In light of the pending reference to the Supreme Court's Larger Bench, the Tribunal exercised caution and refrained from making a definitive determination on the inclusion of service charges in the transaction value. The appeal was thus disposed of with the aforementioned liberty granted to the Revenue to seek further recourse following the resolution of the issue by the Supreme Court's Larger Bench. The judgment reflects a prudent approach by the Tribunal to await clarity from higher judicial authorities before settling the contentious issue raised in the appeal.