ORDER
S.L. Peeran, Member (J)
1. This appeal arises from Order-in-Original No. 13/05 dated 19.5.2005 passed by the Commissioner of Customs, Tirupati confirming demands on the ground of under-valuation of the goods for the period 2.3.1999 to 31.3.2002 besides imposing penalties. The issues involved in this appeal pertain to (a) Freight and Insurance Charges (b) Loading and Unloading Charges and (C) Inspection Charges.
(a) Freight and insurance charges
2. It is submitted by the appellant that the freight and insurance charges cannot be included in the assessable value. In this regard, it is submitted that the issue is fully covered in their favour by following 14 rulings.
(i) Escorts JOB Ltd., v. CCE, New Delhi .
(ii) The Commissioner of Central Excise, Bhopal v. Laxmi Engineering 2005 (179) EL T 342.
(iii) Bansal Wire Industries v. CCE, Ludhiana 2004 (178) ELT 1033.
(iv) Dalmia Biscuits Pvt. Ltd. v. CCE, Chandigarh 2004 (178) ELT 996.
(v) Triveni Glass Ltd., v. Commissioner, Guntur 2004 (178) ELT 268.
(vi) West Coast Paper Mills v. Commissioner, Bangalore .
(vii) Rani Plastic Pipes Industries v. CCE, Tirupati 2005-TIOL-611- CESTAT-Bang.
(viii) ITI Ltd. v. Commissioner-Final Order No. 936, 937/2005
(ix) Southern Power Equipments v. CCE, Bangalore Final Order No. 763, 764/2005.
(x) Business Furniture Product Pvt. Ltd. v. CCE, Bangalore Final Order No. 210/2005 dated 9.2.2005.
(xi) Bharat Heavy Electricals v. CCE 2005-TIOL-658-CESTAT- Bang.
(xii) Southern Power Equipment Company Pvt. Ltd. v. CCE, Bangalore Final Order No. 1986/2004.
(xiii) Associated Drug Company v. CCE, Bangalore Final Order No. 1949/2004.
(xiv) Hindustan Cables Ltd. v. CCE, Hyderabad-III Final Order No. 1662 to 1665/05 dated 9.9.2005
It is submitted that the order is not legal and proper and Commissioner was not justified in rejected the above citations.
(b) Loading and Unloading Charges
3. With regard to the unloading charges, it is submitted that these charges are collected for unloading the goods at the premises of the customer. It is submitted that when the assessments had been finalized under Section 4(1)(a) of CE Act, the Commissioner was not justified in proceeding to reassessment. The valuation on the basis of Section 4(1)(b) and by order to include the unloading charges which are collected for unloading at the customers premises is not justified. The ratio of the following ruling are relied on:
(i) BWL v. CCE, Chandigarh .
(ii) CCE, Pune v. Poona Bottling Company Ltd. 2005 (182) ELT 23.
(iii) Sapphire (India) v. The Commissioner of Central Excise, Jaipur .
The learned Counsel fairly concedes loading charges pertain to loading of goods at the factory premises and the duty works out to Rs. 31,366/- and he does not contest on this aspect.
(c) Inspection Charges
4. He further submitted that the inspection charges need not be added in the assessable value for the reason that at every stage of manufacture they follow strict quality control and in-house and product manufactured by them qualify in any test or inspection. Customers desire to have the goods inspected by RITES for which they pay separately and this cannot form a part of the assessable value, as held by the Tribunal in the following 3 judgments.
(i) Bhaskar Industrial Development Ltd., v. CCE, Calcutta III .
(ii) CCE, Raipur v. Bhaskar Ispat Pvt. Ltd. .
(iii) BHEL v. CCE, Bangalore III Final Order No. 1567, 1568/2005 dated 30.8.2005.
5. The learned JDR relied on the findings given by the Commissioner.
6. On a careful consideration and perusal of the entire judgments, we are of the considered opinion that the freight and insurance charges cannot be added in the assessable value and the issue is covered in the assessee’s favour by the 14 judgments relied by the learned Counsel, which are cited supra. In a similar circumstance, the ratio of the judgment rendered in the case of CCE, Raipur v. Bhaskar Ispat Pvt. Ltd. (supra) has been followed by this in the case of BHEL v. CCE, Bangalore-III vide Final Order No. 1567, 1568/2005 dated 30.8.2005. Hence, the inclusion of these two elements in the assessable value is required to be set aside.
7. With regard to inclusion of unloading charges, it is seen that the price had been assessed and approved under Section 4(1)(a) of the CE Act. The unloading charges pertain to the charges collected by the assessee from the customers for unloading the goods at the customers premises. The price has been arrived at after sates made at the factory gate, therefore, the inclusion of unloading charges at the customers premises is not required to be added in the assessable value in terms of the three citations already noted supra. However, the assessee has not contested the inclusion of loading charges. It is contended that the total duty could be only Rs. 31,366/- pertaining to loading charges. The Revenue is required to verify this contention and if it is found to be correct and the same is recoverable.
8. With regard to the inspection charges, the Tribunal in the case of BHEL (supra) had clearly held that the activity of quality control test at the instance of customer and being optional is not required to be added in the assessable value. The Tribunal has relied on the ratio of the judgment rendered in the case of Grasim Industries v. CCE, Indor 2004 (164) ELT 257 and that of Volvo India Ltd. v. CCE, Bangalore 2005 (68; RLT 32. Both these rulings are in the light of the Apex Court judgment rendered in the case of CCE, Pondicherry v. Acer India Ltd. . In the present case also the Quality Control Test is being done at the instance of the customers by RITES. The ratio of the cited judgments would apply to the facts of this case also. Hence, the inspection charges are not to be added in the assessable value.
9. In the result, the demands on (a) Freight and insurance charges (b) unloading charges (c) inspection charges are set aside. The demand on loading charges is confirmed. The penalty for not adding the loading charges is fixed at Rs. 10,000/- (Rupees Ten Thousand Only). The appeal is allowed in the above terms with consequential relief, if any.
(Pronounced in open Court on 16 Mar. 2006)