CESTAT Mumbai Sets Aside Excise Duty Demand On Crompton Greaves, Rules Type Test Charges Not Taxable

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside a Central Excise duty demand against Crompton Greaves Ltd., holding that charges recovered separately for conducting "type tests" on transformers at the request of customers cannot be included in the assessable value of the goods.

A bench of Judicial Member S.K. Mohanty and Technical Member M.M. Parthiban passed the ruling while allowing an appeal filed by Crompton Greaves Ltd. (Transformer Division).

The tribunal observed, "Since the issue involved in the Final Order dated 30.04.2026 is entirely identical to the facts involved in the present appeal, we are of the view that the stand taken in the order dated 30.04.2026 by the Co-ordinate Bench of the Tribunal should be followed in the present case."

Crompton Greaves manufactures transformers and clears them on payment of Central Excise duty. In certain cases, customers requested the company to conduct "type tests" on transformers before dispatch, for which it recovered separate charges.

The Department alleged that these charges formed part of the transaction value of the transformers and issued a show cause notice seeking recovery of Central Excise duty. The adjudicating authority confirmed the demand, and the Commissioner (Appeals) upheld that order, following which the company filed the present appeal before the tribunal.

The company relied on earlier tribunal decisions in its own case involving the same issue. The Department maintained that the separately recovered type test charges formed part of the transaction value of the transformers and sought recovery of Central Excise duty on that basis.

The tribunal noted that the issue before it had already been decided in Crompton Greaves' own case for an earlier period and found that the facts in the present appeal were identical. Holding that there was no reason to take a different view, it applied its earlier ruling and concluded that the duty demand could not be sustained.

Accordingly, the tribunal set aside the impugned order confirming the Central Excise duty demand and allowed the appeal filed by Crompton Greaves.

For Appellant: Advocate Kiran Chavan,

For Respondent: Rajiv Ranjan, Authorized Representative