2018 (9) TMI 1570 – CESTAT CHENNAI – TMI – Valuation – inclusion of Inspection Charges, Service charges and Freight Charges in assessable value – appellant have collected separately these charges from their buyers through debit notes – whether pre-delivery inspection charges are includible in the assessable value? – Held that:- The said issue was settled by the Hon’ble Supreme Court in TVS Motors Co. Ltd. [2015 (12) TMI 874 – SUPREME COURT], where it was held that PDI charges and free ASS charges would not be included in the assessable value under Section 4 of the Act for the purposes of paying excise duty – demand set aside.
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Whether the service charges related to transport arrangement through rail is includible in assessable value? – Held that:- Since the said charges are collected after the place of removal which is the factory gate. On the very basis, it can be definitely held that the service charges collected for cargo handling on the instruction of the contractor cannot be
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with interest and also for imposing penalties. After due process of law, the original authority confirmed the demand, interest and also imposed penalties. In appeal, Commissioner (Appeals) set aside the demand in respect of freight charges but however confirmed the demand in respect of service charges as well as pre-inspection delivery charges. Hence this appeal. 2. On behalf of the appellant, ld. counsel Shri Akhil Suresh submitted that the issue whether pre-delivery inspection charges are to be included to arrive at the assessable value is settled by the decision of the Hon ble Supreme Court in the case of Commissioner of Central Excise, Mysore Vs. TVS Motors Co. Ltd. – 2016 (331) ELT 3 (SC). 2.1 With regard to the service charges, he submitted that these services are related to arrangement of railway transport and hence they are not includible in the assessable value. For the same reason, the Commissioner (Appeals) has excluded the railway freight. These are service charges which ar
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is includible in the assessable value. He referred to Section 4(3)(d) of Central Excise Act, 1944 and submitted that transaction value means the price actually paid or payable for the goods and it would include such amounts which are in connection with the same. The charges recovered by the assessee towards handling of the cargo and thereafter transportation in the rail has enhanced the price of the goods and therefore this amount has been rightly included in the assessable value. 4. Heard both sides. 5. The foremost issue which arises for consideration is whether pre-delivery inspection charges are includible in the assessable value. The said issue was settled by the Hon ble Supreme Court in TVS Motors Co. Ltd. (supra). Following the same, we are of the view that the demand is not sustainable and set aside the same. 5.1 The second issue that arises for consideration is whether the service charges related to transport arrangement through rail. These charges have been paid to M/s. ARR
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