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TMI Blog2011 (9) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... of the goods, the goods were subjected to third party inspection by M/s. SGS India Pvt. Ltd., Nagpur. The inspection agency raised bill on the appellant towards service charges and also collected service tax thereon from the appellant. The said service charges along with service tax were recovered by the appellant from the buyers of the goods separately. The appellant took CENVAT credit of the service tax paid on inspection charges and utilised the same in the discharge of excise duty on the goods manufactured and cleared by them. The CENVAT credit availed on account of inspection charges amounted to Rs. 2,85,708/- for the years 2005-06 and 2006-07 and Rs. 1,21,439/- for the year 2007-08. 2.1. Two show cause notices both dated 05/05/2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been paid by them. The inspection agency has raised the bill for the services rendered on them and they have paid the inspection charges along with service tax thereon. Since inspection and testing has been done in or in relation to the manufacture of their products, the said service is an input service and, therefore, they are rightly entitled to claim CENVAT credit of the service tax paid on the said service. 4. To a query from the bench, whether the inspection charges were included in the assessable value of the goods supplied to the buyers and excise duty liability was discharged on the value inclusive of inspection charges, the advocate submitted that the assessable value did not include inspection charges nor excise duty liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, it has to be used in the manufacture of the finished product and the cost of the service has to form part of the value of the final product. Then only the tax will be a value added tax. What is contemplated and levied under Section 3 of the Central Excise Act, 1944 is a value added tax and, therefore, the cost of the input or the input service should form part of the value of the final product which is manufactured utilising such input or input service. If such costs are not included, then obviously the appellant cannot claim credit of the duty / tax paid on the same under the category of input or input services. Accordingly, the findings of the lower authorities, both the adjudicating authority as also the appellate authority deny ..... X X X X Extracts X X X X X X X X Extracts X X X X
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