2018 (9) TMI 1264 - AT - Central Excise

Valuation - inclusion of third party instruction charges - whether third party inspection charges done under the instructions of the customers are includible in the assessable value or not? - Held that - The extra inspection is being done by the assessee under the direction of their customers and as such is optional in nature. Regular inspection is being done by the appellant in their in-house facilities which is not the subject matter of the present appeal - the confirmation of demand of duty against the appellant is not sustainable. Time Limitation - Held that - The demand is barred by limitation inasmuch as no justifiable reasons for invoking the longer period stand given by the Revenue. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether third party inspection charges instructed by customers are includible in the assessable value or not? Whether the demand raised for a specific period is barred by limitation?

Analysis:
The judgment by the Appellate Tribunal CESTAT ALLAHABAD, delivered by Mrs. Archana Wadhwa and Shri Anil G. Shakkarwar, addressed the issue of whether third party inspection charges, conducted under customer instructions, should be included in the assessable value. The appellants argued that such charges were reimbursed by customers and were not mandatory, citing a precedent from Classic Polytube Pvt. Ltd. The Tribunal found that the extra inspection was optional and customer-directed, distinct from the regular in-house inspections. Consequently, the Tribunal held that the demand of duty against the appellants was not sustainable due to the optional nature of the extra inspections.

Moreover, the Tribunal considered the limitation aspect of the demand. The appellants contended that the demand was time-barred, as the Revenue failed to provide justifiable reasons for invoking the longer period. The Tribunal agreed with the appellants, finding merit in their argument regarding the limitation issue. As a result, the Tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellants.

In conclusion, the judgment clarified that optional third-party inspection charges instructed by customers, distinct from regular in-house inspections, should not be included in the assessable value. Additionally, the Tribunal upheld the appellants' argument regarding the limitation period, ultimately setting aside the demand and providing relief to the appellants.