2002 (8) TMI 626 - AT - Central Excise

Summary

Issues:
Waiver of pre-deposit of duty and penalty regarding duty demand and penalty imposed on manufacturers of Air-conditioning equipments and Uninterrupted Power Supply Systems (UPS) for the period of 1-7-2000 to 31-3-2001.

Analysis:

Issue 1: Duty Demand and Penalty Imposed
The appeal for waiver of pre-deposit of duty and penalty stemmed from the order of the Commissioner of Central Excise (Appeals), Mumbai, confirming a duty demand of Rs. 1,14,61,836/- and a penalty of Rs. 20,00,000/- on the manufacturers of Air-conditioning equipments and UPS systems. The duty was imposed on charges for installation and commissioning of the mentioned systems, cost of bought out items, and freight. The Commissioner held that these charges fell under the definition of 'transaction value' as per Sec. 4(3)(d) of the Central Excise Act, post an amendment in July 2000.

Issue 2: Interpretation of 'Transaction Value'
The Commissioner (Appeals) determined that the installation and commissioning charges, along with the cost of bought-out items, were covered under the definition of 'transaction value' as per the amended Sec. 4(3)(d) of the Central Excise Act. The definition included amounts payable by the buyer to or on behalf of the assessee for various purposes related to the sale, which encompassed charges for installation and commissioning under the phrase "charged for any other matter."

Issue 3: Prima Facie Assessment
Upon hearing the arguments, the Tribunal found that prima facie, the installation and commissioning charges should not be included in the assessable value of excisable goods manufactured by the appellants. This decision was supported by a CBEC Circular stating that if the final product is not excisable, charges for installation and commissioning need not be included in the assessable value. Similarly, the duty demand on the cost of bought-out items for installation and commissioning was also deemed unsustainable prima facie.

Conclusion
The Tribunal waived the pre-deposit of duty demanded on installation and commissioning charges and the cost of bought-out items, pending the appeal. However, the appellants were directed to deposit the undisputed duty on freight within four weeks. The Tribunal's decision was based on the interpretation of the 'transaction value' and the clarification provided in the CBEC Circular regarding the inclusion of charges in the assessable value of excisable goods.