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TMI Blog2023 (8) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, it is solely on the requirement of the customer who gets this special testing and inspection done on the product. Therefore, the appellant is not otherwise involved in the said third party inspection. It is only for the convenience purpose of the customer, the appellant coordinates such third- party inspection for which the payment for such third-party inspection is though initially paid by the appellant but subsequently and finally incurred by the customer. The third- party inspection charges cannot be included in the assessable value/ transaction value of the excisable final product i.e. transformers manufactured by the appellant. This issue has come up for consideration time and again and in various judgment it was held that in the identical fact the third-party inspection charges for special inspection/ testing on behalf of the customer paid by the manufacturer and recovered from the customer is not includible in the assessable/transaction value of the goods on which such special inspection/ testing was conducted. In the present case, the third party inspection charges are not includible in the assessable/transaction value of the goods. Therefore, the demand on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion he placed reliance on the following judgments: Bhaskar Ispat Pvt Ltd 2004 (167) ELT 189 (Tri. LB) A. Infrastructures Ltd - 2003 (160) ELT 549 (Tri. Del) Paxma Axle Springs (P) Ltd 2000 (125) ELT 836 (Tri.) Bhaskar Industrial Development Ltd 2003 (161) ELT 822 (Tri. Kolkata) Raghavendra Pre-Stress Prducts (P) Ltd - 2006 (205 ) ELT 743 (tri. Bang) Siddharth Tubes Ltd 2006 (194) ELT 144 (M.P) J.J Confectionary Pvt. Ltd - 2007 (210) ELT 196 (Tri. Bang) IDCOL Kalinga Iron Works Ltd 2007 (214) ELT 511 (Tri. Kolkata) 2.1 In view of above settled position the demand confirmed by the Adjudicating Authority and upheld by the Commissioner (Appeals) is not legal and correct. 3. Shri P. Ganesan, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding ofthe impugned order. 4. We have carefully considered the submission made by both sides and perused the records. The limited issue to be decided is that whether the third-party inspection charges for testing and inspection on the behest of the customer collected from the customer and paid to third party inspection agency is includible in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Commissioner of Central Excise Customs, Baroda (supra) that inspection charges were not for the additional or optional testing, therefore, taking into consideration facts and circumstances of case, it was held that these are includible in the assessable value. 4. The issue before us is to decide whether the additional testing charges at the request of customer and borne by the customer, are includible in the assessable value of the goods for the purpose of Central Excise duty. We find that the Tribunal in the case of Shree Pipes Ltd. v. Collector of Central Excise, reported in 1992 (59) E.L.T. 462 (Tribunal) held that such additional testing charges born by the customer and which are optional, are not includible in the assessable value of the goods. Revenue filed appeal against this decision and the Hon ble Supreme Court dismissed the appeal, reported in 1992 (61) E.L.T. A63 (S.C.) - C.C.E. v. Shree Pipes Ltd. This decision was followed by the Tribunal in the case of CIMMCO Ltd. v. Collector of Central Excise, Jaipur, reported in 1994 (74) E.L.T. 687 (Tribunal). The appeal filed by the Revenue against this decision was dismissed by the Hon ble Supreme Court, reported in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2000 (125) ELT 836 (Tri.) The duty demand is in two parts, the first one relates to inspection charges borne by the buyer of the appellants goods. This is with regard to inspection carried out by a third party (RITES) on account of the buyer. This works out to Rs. 28,777. Both sides submitted that it is a covered issue, that testing charges incurred on account of third party inspection and testing (like in the case of DGS D) is not includible in the assessable value. Reference was drawn in this connection to the decision of the Tribunal in Shree Pipes Ltd. v. Collector of Central Excise 1992 (59) E.L.T. 462 (Tribunal). In view of this decision of the Tribunal the demand is not correctly made and is required to be set aside. 2. The second part of the demand of about Rs. 33,000 relates to steel scrap found short in the appellant s premises. Appellants are manufacturers of Elastic Rail Clips from Steel Rounds. These Steel Rounds are put to several processes like Forging, etc. The scrap stated to be found short is about 49 MT. Appellant s explanation is that a loss of about 1.5% to 2% occurs during the processing of steel. Appellants have also produced a certificate of Yash P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound involved in manufacture was over 2700 MTs. Since the loss of 49 MT is within the norm, we find the allegation of failure to account for the scrap or its removal without payment of duty, is not justified. Therefore, the demand of duty on this count also is liable to be set aside. We do so. As the demands of duty are not sustainable; the penalty is also required to be vacated. Therefore, the penalty of Rs. 15,000 imposed on the appellant is also set aside. Thus, the appeal is allowed with full relief to the appellants and the impugned order is set aside. 4. The amount of Rs. 32,000 which was deposited pending decision of the appeal shall be returned to the appellants forthwith as demands remain set aside. Bhaskar Industrial Development Ltd 2003 (161) ELT 822 (Tri. Kolkata) 5. We have considered the submissions made by both the sides. The only issue that arises for consideration in these appeal is whether the inspection charges incurred by the Railways who is the buyer of the goods, is to be included in the assessable value or not. We note that this issue is no longer res integra as the issue has already been decided against the Revenue by a catena of judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the inspection charges paid to RITES by the Railways are not includible in the assessable value. We also take note of the fact that the South Zonal Bench in the case of Southern Structurals Ltd. v. CCE, Chennai-II reported in 2002 (146) E.L.T. 678 (T)= 2002 (52) RLT 334 has held that inspection charges for inspection by the third party at the request of the buyer is includible in the assessable value. The said judgment of the Tribunal is distinguishable from the various judgments cited by the assessee inasmuch as in the case of Southern Structurals, the inspection charges @ Rs. 2,400/- per wagon were collected by the assessee therein from the Railways who were the buyers of the goods and it was in that circumstances that it was held that the inspection charges are to be included in the assessable value whereas in the present case, the inspection charges were paid by the Railways to the RITES who had carried out the inspection at the instance of the Railways. 6. In view of the above, respectfully following the ratio of the various judgments cited supra, we hold that the impugned order is not legal and proper and we set aside the same and allow the appeals 4.2 In view of t ..... 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