1991 (12) TMI 146 - AT - Central Excise

Summary

Issues Involved: Determination of whether testing charges conducted at the request of customers are includible in the assessable value.

Summary:
The appeal before the Appellate Tribunal CEGAT, New Delhi arose from an Order-in-Appeal regarding the inclusion of inspection charges in the assessable value of Asbestos Cement Pipes supplied to the Public Health Electric Department (PHED), Rajasthan. The dispute centered around whether the testing charges conducted at the request of PHED should be considered part of the manufacturing cost and included in the assessable value.

The Collector, while allowing the Department's appeal, contended that the inspection by DGS & D was obligatory before goods were considered manufactured as per specifications and ready for sale. However, the Assistant Collector noted that the testing charges were not included in the value of goods sold to other wholesale dealers, as they were covered under ISI specifications and tested accordingly.

The main contention of the appellants was that the additional testing by DGS & D, at the instance of PHED, was not necessary for the manufacture and sale of the goods as they were already tested as per ISI specifications and ready for sale. The appellants argued that since the testing charges were borne by PHED and not included in the price to wholesale dealers, they should not be included in the assessable value.

The Tribunal, after considering the legal provisions and submissions from both sides, concluded that the testing charges conducted post-manufacturing, at the request of specific customers, should not be included in the assessable value of the goods. Drawing an analogy to the exclusion of costs for special secondary packing not part of normal wholesale trade, the Tribunal held that the testing charges should be excluded from the assessable value based on the admitted facts that the goods were fully manufactured, ready for sale, and already sold to other wholesale customers.

In a separate assent, it was agreed that the cost of testing/inspection carried out post-manufacturing, at the request of specific customers, should not be included in the assessable value of the goods, aligning with the principles established in previous legal judgments.