1997 (12) TMI 282 - AT - Central Excise

Summary

Issues:
1. Inclusion of charges incurred by the manufacturer for tests carried out by specialized agencies in the assessable value of transformers.
2. Application of the extended period of limitation for duty evasion.
3. Whether charges for tests/processes carried out outside the factory are includible in the cost of manufacture.

Analysis:
1. The appeal dealt with the question of whether charges incurred by the manufacturer for tests conducted by specialized agencies like BHEL and CPRI on transformers should be included in the assessable value of the transformers. The appellant argued that such charges were specific to certain transformers as per customer requirements and were not conducted on all transformers. The appellant contended that charges for tests carried out in their own factory were already included in the cost of manufacture and duty paid. Previous proceedings had favored the appellant, emphasizing no intent to evade duty.

2. The respondent contended that the charges were not solely for testing but also included processes integral to manufacturing, making them part of the cost of manufacture. Regarding the limitation period, the respondent argued that previous orders applied to specific contracts and did not automatically extend to all contracts, justifying a different treatment for charges incurred outside the factory in the manufacturing process.

3. The tribunal reviewed the submissions and records, rejecting the respondent's argument that charges for impulse, temperature, heat run, and short circuit tests were part of the manufacturing process and not just testing. The tribunal found that these tests were customer-specific and not routine, aligning with earlier decisions where impulse testing charges were deemed non-includible in the assessable value. The tribunal upheld the appellant's argument on limitation, setting aside the impugned order and allowing the appeal.