Crompton Greaves Ltd. Vs Commissioner of Central Excise (CESTAT Mumbai)
The appellant, a manufacturer of transformers, cleared its products on payment of central excise duty based on the transaction value. In certain cases, at the request of customers, it conducted “type tests” on transformers and recovered separate charges for such testing. The Department alleged that these type test charges formed part of the transaction value and issued a Show Cause Notice dated 29.10.2015 demanding central excise duty. The Additional Commissioner confirmed the demand by order dated 18.04.2016, and the Commissioner (Appeals), by order dated 21.10.2016, upheld the adjudication. The appellant challenged that order before the Tribunal.
The issue before the Tribunal was whether central excise duty was payable on the charges collected for type testing of transformers undertaken pursuant to customer contracts.
The Tribunal observed that the issue was covered by its own Final Order No. 85619/2026 dated 30.04.2026 in the appellant’s case for an earlier period. As the facts in the present appeal for January 2015 to March 2015 were identical, the Tribunal followed its earlier decision.
The Tribunal noted that type testing was neither mandatory nor a routine part of the manufacturing process. It was undertaken only where customers specifically requested such testing, generally for their own satisfaction or due to lack of testing facilities. The testing was carried out only on selected transformers on a random basis, the cost was recovered separately from those customers, and the activity took place after manufacture.
