1996 (11) TMI 211 - AT - Central Excise

Summary

Issues:
Includibility of inspection and testing charges arranged and paid for by customers in the assessable value for excise duty calculation.

Detailed Analysis:

The judgment pertains to the issue of whether inspection and testing charges arranged and paid for by customers should be included in the assessable value for excise duty calculation. Both parties agree that the issue is covered by a previous decision of the Tribunal in the case of Shri Pipes. The Tribunal in the case of Shri Pipes held that the excise duty is chargeable on the price the manufacturer receives at the time and place of goods removal. In this case, the manufacturer does not charge customers for additional testing conducted at their instance. The manufacturer only receives the price from wholesale dealers, excluding additional testing charges borne by the customers. The Tribunal concluded that since the cost of additional testing is not included in the price received by the manufacturer in the wholesale market, it should not be considered in the assessable value for excise duty calculation. The appeal was allowed, and the Collector's order was set aside based on this reasoning.

The Tribunal further emphasized that unless it can be demonstrated that the testing done by customers is in place of quality control tests by the manufacturer, those charges cannot be included in the assessable value. The judgment highlighted that in the present case, the charges incurred by customers for optional testing were not in lieu of manufacturer's quality control tests. The Tribunal dismissed the appeal of the revenue based on this analysis and the precedent set by the previous decision in the case of Shri Pipes.

In conclusion, the Tribunal followed the precedent established in the case of Shri Pipes and held that inspection and testing charges arranged and paid for by customers should not be included in the assessable value for excise duty calculation unless they replace quality control tests conducted by the manufacturer. The judgment emphasized that such charges, when incurred by customers for their specific requirements, should not be considered in the value of the goods for excise duty purposes. The appeal of the revenue was dismissed based on this interpretation and application of the legal principles established in previous decisions.