TMI Blog1991 (12) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... terial as well as the finished product. They also have qualified engineers and other staff to carry out the tests. After the tests are conducted by their own quality control people, ISI Inspectors visited the appellants factory to check up the quality control of the goods manufactured. 3. The appellants supplied the goods to the Public Health Electric Department (PHED), Rajasthan. The said department required the goods to be inspected on their behalf by DGS D, Ministry of Works, Housing Supply, New Delhi. The relevant clause of the contract under which the goods are supplied to the Department reads as follows: INSPECTION: (i) The material will be got inspected by you through DGS D mentioned below before dispatch 5% of the tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -1985, the appellants sent a reply. On a consideration of the reply and also after hearing the appellants, the Assistant Collector approved the price list by excluding the inspection charges. The Collector, Jaipur under Sec. 35E(2) of the Central Excises Salt Act directed the Assistant Collector to file an appeal. Accordingly, the appeal was filed. The Collector (Appeals) allowed the Department s appeal. Hence, the appeal before us by the assessee. 6. The Collector, while allowing the Department s appeal observed as follows: In this regard I observe from the copy of the contract filed before me by the respondent that the inspection by DGS D is ebligatory before the goods are in fact purchased by the buyers concerned. In fact as far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid to DGS D who carries on the specific orders of the customers. These charges, therefore, cannot be treated as value of goods. 7. The main contention of the appellants is that the appellants have adequate testing facility and they were carrying out the tests as per the standards laid down by the I.S.I. Since they were approved by ISI First, the product was tested as per ISI specification and the product was ready for sale and no further testing was necessary and the goods are sold to some parties without any additional inspection and no separate charge had been charged from them. The additional testing at the instance of PHED by the DGS D is carried out and the appellants pay to DGS D on behalf of the PHED and get it reimbursed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for making the goods marketable are included in the assessable value. 10. In this context, we may refer to the definition of assessable value under Sec. 4 of the Act. Under Sec. 4, the assessable value shall be the price at which the goods are ordinarily sold at the time and place of removal. 11. In this case, the duty is chargeable on the price which the manufacturer gets at the time and place of removal of goods. The appellant is not charging anything from the customers towards the additional testing conducted at their instance. The clause of the contract provides that the inspection charges shall be borne by the department but the same shall be paid initially by the contractor and shall be claimed in full in the respective bill for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice is acceptable under Section 4 of the Customs Act even if it is different from the wholesale price under Section 4(l)(a). That has been the position accepted by the Courts and the Tribunal in a number of judgments. The contract in this case is that the goods must be subjected to inspection by DOS D before it is accepted by the Customer, namely, PHED, Rajasthan. The relevant clause of the contract has already been extracted in the order proposed by the learned sister. Learned SDR has, therefore, submitted that whatever price is therefore payable by the customer to the appellant herein on the basis of the contract including the charges for inspection carried out by the DOS D should be treated as the value for the purposes of Section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee at the instance of the wholesale buyer which is not generally provided as a normal feature of the wholesale trade, the cost of such testing should be deducted from the wholesale cash price. He, accordingly, prays that the impugned order be set aside and the appeal be allowed. 15. I have carefully considered the submissions from both sides and I find sufficient force in the plea of the learned Advocate, Shri Asthana. In fact, the case of the appellant is on a stronger footing in respect of testing/inspection charges carried out subsequent to what is necessary for putting the goods in wholesale market that what it is in the case of special secondary packing. In the case of packing there is a legal provision for including the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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