By TIOL News Service

MUMBAI, JAN 31, 2017: THE appellant manufactured instruments for MSEB under a contract. The invoices raised included certain charges on account of guarantee provided by the appellant to MSEB. The said value was not included in the assessable value for the purpose of payment of tax.

Resultantly, CE duty demand was raised invoking extended period of limitation.

The demand was confirmed by the original authority and upheld by the Commissioner(A), therefore, the appellant is before the CESTAT.

It is submitted that extended period has been invoked on the strength of a statement recorded, but the copy of the said statement has not been produced to the appellants; that the total price mentioned in the contract with MSEB has been recovered and no separate charge for the guarantee was made in the contract.

The AR argued that the guarantee charges being compulsory in nature, needs to be included in the assessable value.

The Bench observed -

++ The copy of contract produced shows the payment solely for the goods. In the said contract, there is no price attached to the said guarantee. Consultant has clarified that the price indicated in the contract is inclusive price and there is no separate price attached to the guarantee.

++ In view of the above, the appellants are liable to pay tax on the entire value of the goods recovered by them as per the contract. It is not open to apportion a part of the value to the guarantee and exclude that from the assessable value.

++ The appellants have excluded the value of guarantee without any authority. In the invoice issued by the appellants, they have mentioned against the guarantee amount, the same as extra charges. From the above discussion, it is apparent that the same are not extra charges but are included in the value initiated with MSEB. This clearly amounts to mis-declaration.

The appeal was dismissed.

(See 2017-TIOL-280-CESTAT-MUM)