Per Shri T.P. Nambiar :

This is an appeal filed by the appellants against the orders passed by the Additional Collector wherein he held that the Additional Test which was done on the goods was as per the customer's choice and the value thereof is to be added to the assessable value in terms of section 4 (1) (a) (i) of Central Excises and Salt Act 1944. Accordingly, a duty demand of Rs. 60,800/- is made in the impugned order and a penalty of Rs. 6,000/- is imposed.

2. The learned advocate Shri T. Ramesh pointed out Additional Test is done abroad at the instance of the customer. He pointed out that usually, the necessary tests were done by the appellants in their own factory and all the customers accepted same without any additional test. But as far as the Jammu Engg. Department is concerned, they wanted an additional test to be done in this regard and at the instance of that customer, the additional test was done by the appellants. Firstly, the cost were borne by the appellants which was reimbursed by the above said Jammu Engg. Department. He therefore pointed out that this additional test having been done at the instance of the customer, the same is not to be added to the assessable value. He pointed out that this additional test is done in view of the contract entered into by the appellants with the Jammu Engg. Department. This test was not carried out with respect to the other customers who are purchasing this 11Kva Indo Vacuum Circuit Breakers. In this connection, he relied on the decision of the tribunal in the case of Shri Pipes Pvt. Ltd. Vs. CCE reported in 1992 (59) ELT as well as the order of the Ist bench of Delhi tribunal in order No. 1278/97-A dt. 8.7.97. Relying on the above said decisions, he stated that the impugned order is not in accordance with law.

3. The learned JDR for the department stated that it is clear that unless the Special Type test is conducted the customers who wants such test to be conducted will not accept the goods supplied by the appellants. He, therefore, pointed out that the Addl. Collector has held that each customer is a class of buyer and the total value at which such goods are sold to these customers should form part of the assessable value. Therefore, he pointed out that the value incurred for this additional test done abroad is includable for the purposes of assessment.

4. We have considered the submissions made by both the sides. It is now seen that as far as the appellants are concerned, they are selling the goods to all the customers without conducting this additional test. It is only in the case of Jammu Engineering Deptt., they wanted this special test to be done. This special test is done at their instance as well as at their cost. In a similar case, the tribunal in the case of Shri Pipes Pvt. Ltd. has held that although according to the agreement, the appellants were paying initially and getting the same reimbursed from the customers, still the same test was done at the instance of the customers. In that case also, the testing was optional. Therefore, the tribunal held that this optional testing having been done at the instance of the customers, the charges incurred for such testing which is borne by the customers is not includable in the assessable value. The learned advocate also relied on the decision of the tribunal in the case of appellants themselves in order No. 1278/97-A dt. 8.7.97 wherein the tribunal at para 3 has stated that since the manufacturer conducts routine test in their factory and since special test is conducted at the instance of buyers, the cost of special testing cannot be included in the assessable value. However, in spite of that observations, the order as emerged was that the appeal was dismissed for which the learned advocate stated that a rectification application is filed. He drew our attention that the principles laid down in that decision is that where the manufacturer conducts Routine Test in their factory and if special test is conducted at the