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2015 (10) TMI 35 - AT - Central ExciseValuation of goods - Whether PDI charges incurred only at the instance of the buyer are required to be added to the assessable value under Section 4 of the Central Excise Act, 1944 or not - Held that - The first appellate authority has rejected revenue s appeal on the ground that as per Larger Bench judgment in the case of Bhaskar Ispat Pvt. Ltd. (2004 (3) TMI 102 - CESTAT, NEW DELHI) PDI charges at the option exercised by the buyer are not required to be included in the assessable value. It is also observed that this issue is no more res integra as this very bench in the case of CCE, Ahmedabad-II v. Johnson Pumps (I) Ltd. (2009 (9) TMI 474 - CESTAT, AHMEDABAD) - issue before the Larger Bench, in the case of Maruti Suzuki India Ltd. (2010 (8) TMI 49 - CESTAT, NEW DELHI) was only on inspection done on compulsory PDI done in all cases by the appellant in that case. It was not the case before the Larger Bench that PDI inspections were done at the instance of the buyer. In view of the interpretation made by this bench in the case of CCE, Ahmedabad-II v. Johnson Pumps (I) Ltd. (2009 (9) TMI 474 - CESTAT, AHMEDABAD) PDI charges recovered at the instance of the buyer are not includible in the assessable value and accordingly appeal filed by the revenue is required to be rejected - Decided against Revenue.
Issues:
Whether Pre-Delivery Inspection (PDI) charges recovered by the respondent for conducting tests at the buyer's instance are includable in the assessable value under Section 4 of the Central Excise Act, 1944. Analysis: The appeal by the revenue concerns the inclusion of PDI charges in the assessable value, as per the Order-in-Original where the demand against the respondent was dropped. The first appellate authority based its decision on the judgment of CESTAT Larger Bench in Bhaskar Ispat Pvt. Ltd., stating that inspection done at the buyer's option is not part of the assessable value. The revenue argues that PDI charges should be added to the assessable value under the new Section 4 of the Act. The respondent contends that additional testing, if requested by certain government buyers, should not impact the assessable value. The key argument from the revenue is that PDI charges should be included in the assessable value, citing the Maruti Suzuki India Ltd. case. The respondent, supported by the CCE, Ahmedabad-II v. Johnson Pumps (I) Ltd. case, maintains that such charges incurred for the buyer need not be added to the assessable value. The Tribunal reviews the case records and previous decisions to determine if PDI charges, specifically at the buyer's instance, should be part of the assessable value. The Tribunal references various legal precedents and circulars, highlighting that charges incurred by the customer for inspections are typically not included in the assessable value. The opinion is reinforced by the withdrawal of certain circulars and the clarification that the new transaction value under Section 4 aligns with the previous valuation rules. The Tribunal concludes that PDI charges reimbursed by buyers need not be included in the assessable value, upholding the decision of the first appellate authority. The Tribunal distinguishes the Maruti Suzuki India Ltd. case, emphasizing that the issue there pertained to compulsory PDI inspections by the manufacturer, not inspections at the buyer's request. Relying on the interpretation from previous cases, the Tribunal rejects the revenue's appeal and allows the respondent's cross objection. Consequently, the appeal by the revenue is dismissed, and the cross objection by the respondent is upheld. In summary, the judgment clarifies the treatment of PDI charges in the assessable value, affirming that charges incurred at the buyer's instance do not need to be added to the assessable value under Section 4 of the Central Excise Act, 1944.
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