C.C.E. Vs. LUBY SUBMERSIBLES LTD.

JUDGEMENT

(1.) THIS appeal has been filed by the revenue with respect to OIA No. 17/2007(Ahd -II)CE/Raju/Comr(A), dt. 27.02.2007 issued on 19.03.2007 under which the first appellate authority has dismissed the appeal filed by the revenue. Under the Order -in -original No. MP/66/DEMAND/06, dt. 19.05.2006 demand raised against the respondent M/s. Luby Submersibles Ltd. was dropped by the adjudicating authority. The issue involved in these proceedings is whether Pre -Delivery Inspection (PDI) charges recovered by the respondent for conducting test at the instance of the buyer is liable to be included in the assessable value or not. The first appellate authority has relied upon the judgment of CESTAT Larger Bench in the case of Bhaskar Ispat Pvt. Ltd. [ : 2004(167) ELT 189 (Tri. LB)] wherein it was held that inspection done at the option of the buyer is not includable in the assessable value. Revenue has filed the present appeal on the ground that PDI charges recovered by the respondent are required to be added to the assessable value as the same represent a part of the transaction value under the new Section 4 of the Central Excise Act, 1944. A cross objection E/MA/CO/679/07 has been filed by the respondent M/s. Luby Submersibles Ltd. emphasizing that their products are being used by individuals, agriculturists, industrialists or the government and in all these cases goods are completely tested and ready for use as per the prescribed norms. It is their ground that nobody even asks for a trial run but some of the government buyers in certain cases impose a condition that goods should again be tested from an approved laboratory before lifting the goods from respondents factory. Such testing done for the second time on the basis of the option exercised by the buyer is not required to be added to the assessable value.

(2.) SHRI Jitendra Nair (A.R.) appearing on behalf of the revenue argued that Pre -Delivery Inspection (PDI) charges recovered by the respondent are required to be added to the assessable value as held by Delhi Larger Bench in the case of Maruti Suzuki India Ltd. Vs. CCE, Delhi -III [ : 2010(257) ELT 226 (Tri. LB)] and that orders passed by the lower authorities should be set aside.

(3.) HEARD both sides and perused the case records. The issue involved in the present appeal filed by the revenue is whether PDI charges incurred only at the instance of the buyer are required to be added to the assessable value under Section 4 of the Central Excise Act, 1944 or not. The first appellate authority has rejected revenues appeal on the ground that as per Larger Bench judgment in the case of Bhaskar Ispat Pvt. Ltd. (Supra) PDI charges at the option exercised by the buyer are not required to be included in the assessable value. It is also observed that this issue is no more res -integra as this very bench in the case of CCE, Ahmedabad -II Vs. Johnson Pumps Ltd. (Supra) has held as follows in paragraph 4 and 5: