2017 (9) TMI 872 - AT - Central Excise

Valuation - includibility - whether stamping, verification & testing charges collected by the appellants and stamping fee remitted to the concerned stamping authority is liable to be included in the assessable value of the flow meters manufactured by the appellant? - Held that - in order to make the goods marketable it is necessary to verify and stamp weights and measures. Rules are provided for weights and measures sold inter-state. The definition of weights and measures include instruments also - fee/charges collected for verification and stamping is to be included in the assessable value - decided against appellant. Apparently two SCNs have been issued for same period raising the same allegations. Except for difference in quantification of demand, both the SCNs are on the same set of facts, allegations. The second SCN is not based on any mew material. The department has opted to withdraw the first SCN, in which the duty demand is less. Thus in our view, the demand is not sustainable and requires to be set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues involved: Whether stamping, verification & testing charges collected by the appellants and stamping fee remitted to the concerned stamping authority are liable to be included in the assessable value of the flow meters manufactured by the appellant.

Detailed Analysis:

1. Assessable Value Inclusion: The case revolved around the inclusion of stamping charges in the assessable value of flow meters manufactured by the appellant. The department alleged that the appellant had under-valued the goods by excluding stamping charges from the assessable value, contravening Central Excise Rules. The department issued a Show Cause Notice proposing to include stamping charges in the assessable value, leading to a demand of duty, interest, and penalty. The adjudicating authority confirmed the demand, which was upheld by the Commissioner (Appeals), prompting the appeal.

2. Contentions of the Appellant: The appellant argued that the stamping and verification charges were not related to the sale and should not be part of the transaction value. They highlighted that service tax had been paid on these charges since February 2005, indicating that they were not exigible to duty. The appellant contended that for stamping charges to be part of the transaction value, they must be collected as part of the price for the weight and measure, not separately billed on a reimbursable basis.

3. Revenue's Position: The Revenue argued that any amount charged apart from the price that the buyer is liable to pay to the manufacturer in connection with the sale should be included in the assessable value as per Section 4 of the Central Excise Act, 1994.

4. Decision: The Tribunal analyzed the legal provisions and held that stamping charges collected by the appellants and fee remitted to the stamping authority should be included in the assessable value. They referenced the responsibilities of manufacturers under the Standards of Weights & Measures Act, emphasizing the necessity to verify and stamp weights and measures before sale. The Tribunal rejected the appellant's contentions and ruled in favor of including the stamping charges in the assessable value.

5. Limitation Issue: The Tribunal also addressed the issue of limitation, noting that two Show Cause Notices were issued for the same period with similar allegations but different quantifications. They found the second Notice unsustainable as it was not based on new material and set it aside, ultimately allowing the appeal and providing consequential reliefs.

In conclusion, the Tribunal decided in favor of including stamping charges in the assessable value of the flow meters manufactured by the appellant, rejecting the appellant's arguments and setting aside the second Show Cause Notice issued for the same period.