Excise – Cestat Chennai: Cost of free supply material received from buyer is not to be included in the assessable value, hence demand is not sustainable on ground of under valuation – Appeal allowed [Order attached]
Order Date – 07 March 2023
Parties: M/s. Techno Packers Vs The Commissioner of GST & Central Excise, Chennai Outer Commissionerate
- The Appellant, M/s. Techno Packers, was found to be undervaluing their final product by not including the value of the materials mainly thermocol, foam, bell pins, blue ink supplied free of cost by their buyers.
- Show cause notice dated 08.10.2010 was issued to the appellant for the period April 2008 to February 2009 proposing to demand short paid duty along with interest and for imposing penalties.
- Whether value of free supplies have to be included in the assessable value for payment of central excise duty?
- The Tribunal relied on the decision in the case of Makwuds India P. Ltd. Vs CCE Chennai-IV - 2018 (6) TMI 707 - CESTAT CHENNAI, wherein it was held that “In Ghatge Patil Inds. Ltd (supra) the Tribunal has relied upon International Auto Products case to hold that such addition of free supplied parts is not to be included in the assessable value. The same view has been maintained by Apex Court by dismissing the Civil appeal filed by department reported in 2015 (322) E.L.T. A28 (S.C.).”
- The same has followed in many judgements. Hence, the demand of duty alleging that cost of free supply material has to be included in the assessable value cannot sustain and the appeal is allowed.