2004 (6) TMI 422 - AT - Central Excise

Summary

Issues:
1. Whether the cost of 'guniting' and transportation charges incurred by the appellants are includible in the assessable value and duty chargeable accordingly.
2. Whether the process carried out by the appellants amounts to manufacture and its value should be added to the assessable value.

Issue 1: Cost of 'Guniting' and Transportation Charges Includible in Assessable Value:

The appellants sought waiver of pre-deposit of duty and penalty in three stay applications. The key issue was whether the cost of 'guniting' and transportation charges should be included in the assessable value. The Commissioner found that the 'guniting' process was carried out within the appellants' own yard, and thus, the charges needed to be added to the assessable value. The learned Counsel argued that the process was not manufacturing and cited Board Circulars and judgments. However, the SDR pointed out that if the activity is within the factory premises, the value must be added. Referring to the Sidhartha Tubes Ltd. case, it was highlighted that even non-manufacturing processes adding value should be included in the assessable value. The Tribunal agreed that the cost of 'guniting' and transportation charges were includible in the assessable value as they were carried out within the factory premises, following the Apex Court's stance.

Issue 2: Whether the Process Amounts to Manufacture:

The appellants argued that the process on the pipes did not amount to manufacture, hence its value should not be added to the assessable value. The Counsel cited various judgments, but the SDR differentiated them, emphasizing that if the process added to the product's value, it should be included. Referring to judgments like Andhra Pradesh Paper Mills Ltd. and Shakti Tubes Limited, it was clarified that if processes were conducted within the factory premises, the costs should be added. The Tribunal concurred that the 'guniting' process added value to the steel pipes, making it necessary to include the costs in the assessable value, as per the Apex Court's directive. Consequently, the appellants were directed to pre-deposit a specified amount within a timeframe, with the balance of duty and penalty waived until appeal disposal, subject to compliance.

In conclusion, the Tribunal upheld that the cost of 'guniting' and transportation charges incurred by the appellants were includible in the assessable value, as the processes were conducted within the factory premises and added value to the final product. The judgment highlighted the importance of adding costs that enhance the commercial value of the product to the assessable value. The appellants were directed to make a pre-deposit, failing which the appeal could face dismissal under the relevant Act.