2016 (1) TMI 292 - AT - Central Excise

Valuation of goods - whether the charges towards training provided to the customer s staff is includable in the assessable value or not - Held that - The customer is at liberty to get their staff trained from the appellant or not. The appellant produced both copies of invoices where charges on account of training are recovered by the appellant and also invoices where it is not so recovered. The charges on account of training the customer s staff is separately shown in the invoices wherever charged and recovered. The arguments of the learned Counsel for the appellant that the activity of training has no nexus with the activity of manufacturing, sale or marketing of the product and the same does not enrich the product has force. The Hon ble Apex Court in the case of PSI Data Systems Ltd. (1996 (12) TMI 47 - SUPREME COURT OF INDIA) held that the charges for installation of computers and training of customer s personnel to operate and maintain it was not includable in the assessable value of the computers. Similarly, in the case of Kirloskar Electric Co Ltd. 2004 (8) TMI 293 - CESTAT, BANGALORE , National Radio & Electronics Co. Ltd. 1998 (2) TMI 297 - CEGAT, MUMBAI , Minicomp Ltd. (2002 (6) TMI 146 - CEGAT, MUMBAI), it has been held that the amounts collected for training are not includable in the assessable value - charges on account of training customer s staff being purely optional has no nexus with the manufacturing and marketing of goods and therefore, not includable in the assessable value. Therefore, we are of the considered view that the appellant is entitled to the refund - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Refund claim rejection under Section 11B of the Central Excise Act, 1944. Inclusion of charges towards training in the assessable value. Unjust enrichment and burden of proof.

Refund Claim Rejection:
The appeal challenged the dismissal of a refund claim by the Commissioner of Central Excise & Customs (Appeals). The appellant, an SSI unit, faced objections regarding charges for start-up training and commissioning included in invoices. The appellant believed these charges were not part of the assessable value but paid under protest. The appellant sought a refund based on CBEC Circular No. 354/81/2000-TRU. The Assistant Commissioner issued a show-cause notice rejecting the claim, upheld by the Commissioner (Appeals). The appellant contended that the charges were not enriching the product value and cited relevant judgments supporting their position.

Inclusion of Charges in Assessable Value:
The main issue was whether charges for training customer's staff should be included in the assessable value. The appellant argued that training charges were not mandatory and did not enhance the product value. They provided evidence of invoices where training charges were and were not included. Citing relevant judgments, including PSI Data Systems Ltd., the tribunal found that optional training charges with no nexus to manufacturing or marketing were not includable in the assessable value. Consequently, the tribunal allowed the refund claim of the appellant.

Unjust Enrichment and Burden of Proof:
The respondent raised the issue of unjust enrichment, asserting that the appellant failed to prove the charges were not passed on to customers. Citing cases like Tata Motors Ltd. and Hindustan Petroleum Corporation Ltd., the respondent argued against granting the refund due to unjust enrichment concerns. The tribunal, lacking evidence on this matter, remanded the case to the lower adjudicating authority to determine if the appellant met the burden of proving no unjust enrichment. The appeal was allowed by way of remand for further assessment on the unjust enrichment aspect.