2010 (5) TMI 749 - AT - Central Excise

Valuation - erection and commissioning charges - includibility - whether the erection and commissioning charges collected by the assessee from their buyers in respect of the goods (electro chlorinator) supplied to the latter from 1-7-2000 to 31-12-2001 are liable to be included in the assessable value of the goods? - Held that - the erection/commissioning charges were collected by the appellant independently of the sale of the goods inasmuch as the Revenue has not placed anything on record to show that such charges were collected by reason of or in connection with the sale - the decision of the lower authorities to include the said charges in the assessable value of the goods cannot be sustained - appeal allowed - decided in favor of assessee.

Summary

Issues:
1. Whether erection and commissioning charges collected by the assessee are liable to be included in the assessable value of goods supplied.
2. Interpretation of 'transaction value' under Section 4(3)(d) of the Central Excise Act.
3. Applicability of previous judgments on the inclusion of erection and commissioning charges in the transaction value for levy of duty.

Detailed Analysis:
Issue 1: The central question in this appeal is whether the charges collected by the assessee for erection and commissioning of goods should be part of the assessable value. The appellant argues that these charges were not collected due to or in connection with the sale of goods. On the other hand, the Revenue contends that since the goods only became finished products after installation, the charges should be included in the assessable value.

Issue 2: The Tribunal analyzed the definition of 'transaction value' under Section 4(3)(d) of the Act, which includes any amount payable by the buyer to the assessee by reason of or in connection with the sale. The Tribunal found that there was no evidence to suggest that the erection and commissioning charges were collected by the assessee in connection with the sale of goods. Therefore, the charges should not be considered part of the transaction value.

Issue 3: The Tribunal referred to previous judgments to support its decision. In cases post-1-7-2000, it was held that erection and commissioning charges collected by manufacturers from buyers should not be included in the transaction value for duty levy purposes. Similarly, a Supreme Court judgment pre-1-7-2000 also concluded that such charges should not be part of the assessable value unless there is evidence of collection in connection with the sale.

In conclusion, the Tribunal set aside the lower authorities' decision to include erection and commissioning charges in the assessable value of goods. The judgment emphasized the importance of establishing a connection between the charges and the sale of goods to warrant their inclusion.