2003 (2) TMI 259 - AT - Central Excise

Summary

Issues Involved:
1. Whether the processes undertaken by M/s. Chinttpurni Engineering Works amount to manufacture.
2. Whether the cost of inputs supplied free of cost by the Railways is to be included in the assessable value of the goods.

Analysis:

Issue 1: Processes Amounting to Manufacture
The Appellant, M/s. Chinttpurni Engineering Works, fabricates various products using rails supplied free of cost by the Railways. The Advocate for the Appellant argued that the processes involved, such as bending and sharpening of rails, do not result in the creation of new products. Citing precedents, the Advocate contended that the conversion of rails into Switch Expansion Joints (SEJs) and Check Rails does not constitute manufacture. On the other hand, the Departmental Representative argued that the processes undertaken by the Appellant result in the creation of distinct products chargeable to duty. The Tribunal analyzed the processes involved in detail and concluded that the processes for Fan Shaped Switches and Check Rails amount to manufacture, making the goods liable to excise duty.

Issue 2: Inclusion of Cost of Inputs
The Tribunal considered the inclusion of the cost of rails supplied free of cost by the Railways in the assessable value of the goods manufactured by the Appellant. Relying on previous judgments, including decisions by the Supreme Court, the Tribunal held that the cost of materials and components supplied free by the Railways is to be included in the assessable value of the final products. Therefore, the cost of rails provided by the Railways is deemed part of the assessable value of the excisable goods, leading to the imposition of excise duty on the Appellant.

Final Decision
The Tribunal ruled that the fittings and fasteners produced by the Appellant are liable to excise duty as they result from manufacturing processes. The cost of rails supplied free by the Railways is to be included in the assessable value of the goods. Regarding Switch Expansion Joints, no excise duty was found leviable as complete SEJs were deemed to come into existence at the site and not at the factory. Fan Shaped Switches and Check Rails were held to be subject to excise duty due to the manufacturing processes involved. The matter was remanded for duty recalculations, leaving the aspect of penalty open for further determination.

The Appeal was disposed of based on the above findings and decisions made by the Tribunal.