4 May 2023 1:30 PM GMT
The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that inspection charges received in connection with the sale of the goods are not includible in the assessable value in the absence of evidence.The bench of P.K. Chaudhary (Judicial Member) and K. Anpazhakan (Technical Member) observed that pre-delivery inspection charges are included in the...
The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that inspection charges received in connection with the sale of the goods are not includible in the assessable value in the absence of evidence.
The bench of P.K. Chaudhary (Judicial Member) and K. Anpazhakan (Technical Member) observed that pre-delivery inspection charges are included in the assessable value when pre-delivery inspection is mandatory and an essential condition for the sale of the goods. However, the pre-delivery inspection is not mandatory. It was conducted only at the instance of the customer, and the customer has reimbursed the same charges paid by the appellant to the inspection agency. There is no evidence available on record to establish that the appellant has collected any amount over and above the inspection charges initially paid by them to the inspection agency.
The appellant/assessee sold their goods mainly to government agencies, collieries, etc. The inspection was not mandatory but conducted at the option of the buyer. Even though they have their own quality control department, the inspection was undertaken by some agencies engaged by them. Initially, the appellants paid the ‘inspection charges’ and later got them reimbursed from the buyers.
The appellant was not getting any excess amount reimbursed over and above the actual amount of ‘inspection charges’ paid by them. The inspection charges reimbursed were not profits in the hands of the appellant. There cannot be additional income from the sale of such goods.
The appellant contended that the inspection charges reimbursed by the buyer could not form part of the assessable value.
The department stated that the appellant has not submitted any evidence regarding the payment made by them to the third-party inspection agency first, and the amount was reimbursed by the customer later. Hence, it is an additional consideration for the sale and, accordingly, includable in the assessable value.
The tribunal has held that in the absence of any such evidence, it cannot be held that the inspection charges are additional consideration received in connection with the sale of the goods and included in the assessable value.
Case Title: M/s.Viswa Industrial Company Limited Versus Versus Commissioner of Central Excise, Kolkata-V
Case No.: Excise Appeal No.102 of 2011
Counsel For Appellant: N.K.Chowdhury
Counsel For Respondent: S.Mukhopadhyay
Click Here To Read The Order