CX - Additional testing which is carried out on transformer by appellant is at behest of their customers - no evidence gathered by Revenue to disprove claim of appellant - cost not included in AV: CESTAT
By TIOL News Service
MUMBAI, FEB 23, 2016: THIS is the third round of litigation.
Earlier litigation before the Tribunal resulted in remand of the case to the first appellate authority to reconsider the issue of inclusion of cost of additional testing charges conducted at the request of customer and inclusion of cost of documentation charges.
The Tribunal had remanded the matter with a specific direction to consider the judgement in the case of Bhaskar Ispat Pvt Ltd. - 2004-TIOL-277-CESTAT-DEL-LB where it is held that Additional testing / inspection charges are not includible in assessable value.
The appellant submitted that the appellate authority did not consider the view of the larger bench in its proper perspective although the issue of inclusion of additional testing charges was settled in favour of the appellant. Further, as regards inclusion of the cost of documentation charges,the appellant referred to the purchase order where it is mentioned that the drawings which are given with the order are not charged, but additional set of drawings are charged and the value does not get included as these documentation charges are post clearance of the final goods manufactured by the appellant. Reliance is also placed on the decision in Shree Pipes Ltd - 2002-TIOL-111-CESTAT-DEL-SB as maintained by the Supreme Court.
The AR while reiterating the finding of the lower appellate authority also submitted that that the cost of additional testing needs to be included in the assessable value as the said tests are required as per the Indian standards and are minimum tests required for marketing of the product manufactured as per the statement of the technical personnel.
The Bench observed that the findings of the appellate authority are incorrect. Inasmuch as -
++ The statement of Deputy General Manager indicates that the tests which are required to be conducted on the Transformers, the statement also records that the appellant conducts all the tests and which are required for their own quality control tests to market the final products. We do not find anything in the statement which states that the appellant has recovered the cost of this mandated testing from the customers. The appellant has been stating before the lower authorities that that additional testing which is carried out by the appellant is at the behest of their customers; the revenue is unable to bring on record that these tests were not carried out on request of the appellant's customers. Revenue has not produced any evidence to negate the claim of the appellant. [Tribunal decision in the case of Shree Pipes Ltd. - 2002-TIOL-111-CESTAT-DEL-SB as upheld by Apex Court followed]
++ As regards the inclusion of documentation charges, we do find strong force in the contentions raised by the learned Counsel, as the specimen purchase order indicates that the documentation charges which are collected by the appellants during the material period is in respect of additional copies of drawings of the Transformers given to their customers on specific request of the customer. Learned Counsel categorically states that one set of drawing given along with the transformer to the customer free of cost. In our considered view, cost of additional copies of drawings given to appellants' customers on specific request cannot form a part of the assessable value as these costs are post manufacturing and clearance.
Holding that the impugned order is unsustainable, the same was set aside and the appeal was allowed.
(See 2016-TIOL-495-CESTAT-MUM)
