9911796707
TMI Blog1992 (6) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... uded in the assessable value of the transformers. Prior to February, 1986, the appellants had been availing of the invoice value assessment under Notification No. 120/75, dated 30-4-1975 and after February 1986, until July, 1986 they had filed the price lists but the charges towards special testing were not included in the assessable value nor the central excise duty was paid thereon. Accordingly, a show cause notice dated. 8-7-1988 was issued to the appellants for the recovery of an amount of Rs. 5,05,833/- as being the duty not paid on the total collection of special testing charges of Rs. 29,86,334/-. Allegation in the show cause notice was made to the effect that these special testing charges were collected by the appellants through inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... former and production of goods is recorded in the RG-1. 2.1 In case of very few customers, they desire that certain investigations be specially carried out for their own satisfaction in presence of their representatives after the manufacture of the transformer is complete in all respects and for which the customer agrees to pay separately. These investigative tests, according to the ld. Advocate, are known as special tests. Where a customer places a bulk order for the transformers, he may decide for his own satisfaction and select at the last moment any one of the transformers out of the lot so procured to be investigated by those special tests. Such investigative tests are normally asked for by State Electricity Boards and Public Undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1992 (59) E.L.T. 462 (Tri.) 2.3 Apart from the aforesaid submission, on merits of the case, the ld. Advocate has also stated that the demand of duty is time-barred inasmuch as the department was fully aware of collection of special testing charges by the appellants from its customers. He points out that matter was adjudicated by the Asstt. Collector of Central Excise vide his order dated 25-8-1984 issued from file No. V(30)55/84/X-2. It cannot therefore be stated by the department by any stretch of imagination that the facts were suppressed by the appellants from them. He submits that the appeal against the aforesaid order of the Asstt. Collector is pending before the Tribunal. It was urged that the show cause notice dated. 8-7-1988 covers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rich the value of the goods. Hence, the Id. JDR submits that in view of the Supreme Court's judgment in the case of Bombay Tyres International Ltd. -1983 (14) E.L.T. 1896 (S.C.) these charges would form part of the value of the goods. It has been held by the Supreme Court in that case that after-sale-service charges would form part of the value of the goods. 3.2 He has also drawn attention to a Book styled as The J & P Transformer Book, 11th Edition, A Practical Technology of the Power Transformer by A.C. Franklin and D.P. Franklin. He draws attention to Chapter 13 namely Performance and Type Tests which indicates that tests to be carried out on transformers are divided into 3 categories namely: 1. Routine Tests. 2. Type Tests. 3. Speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gory of type tests are different from routine tests and being a matter of contract between the manufacturer and the customer these cannot be included in the assessable value of the goods because the goods are otherwise marketable without these tests. 5. We have carefully considered the pleas advanced on both sides. On the first question whether the special/type tests carried out by the appellants and for which separate charges are collected by them from their customers are includible in the assessable value or not, we are of the view that the Tribunal's judgment in the case of Shree Pipes, relied upon by the ld. Advocate applies squarely to the facts of this case. There is no dispute by the department that the goods are marketable even wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... testing is carried out by the assessee at the instance of the wholesale buyer which is not generally provided as a normal feature of the wholesale, the cost of such testing should be deducted from the wholesale cash price". 5.1 Facts of this case are on all fours with the facts of the Shree Pipes' case. Following the ratio of the judgment in the said case, we are of the view that the charges collected for type/special tests by the appellants would not form part of the assessable value of the goods. 5.2 On the question of time bar as well, we find sufficient force in the plea of the appellants. We find from the order dated 25-8-1984 of the Asstt. Collector of Central Excise, Allahabad that the department was aware of the practice at least ..... X X X X Extracts X X X X X X X X Extracts X X X X
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