2006 (9) TMI 310 - AT - Central Excise

Summary

Issues:
1. Recovery of full duty on works contract orders including installation charges and denial of SSI exemption.
2. Dispute over inclusion of installation, erection, and commissioning charges in determining assessable value for parts cleared under work contracts.

Issue 1: Recovery of full duty and denial of SSI exemption
The case involved a notice issued to the appellant proposing the recovery of full duty on works contract orders, including installation charges, for a specific period. The Asstt. Collector confirmed the demand, but the Commissioner allowed an appeal directing further action due to jurisdictional limitations under Section 11A of the Central Excise Act, 1944. The matter was adjudicated by the Collector without issuing a fresh notice, confirming the demand. The Tribunal later set aside the order, directing that installation charges should not be included in the assessable value. Despite this, the Commissioner confirmed the duty amount without issuing a fresh notice. The Tribunal noted that the value of the entire work contract cannot be considered for SSI exemption under Notification No. 175/86-C.E., emphasizing that only the value of goods manufactured and cleared should be taken into account. As the valuation of goods should not include charges like erection and commissioning, the Tribunal found no merit in the impugned order and allowed the appeal.

Issue 2: Inclusion of installation charges in assessable value
The dispute centered around whether installation, erection, and commissioning charges should be added to the assessable value for parts cleared under work contracts. The appellant argued that the Apex Court's judgments in certain cases supported excluding these charges from the assessable value. The notice dated 6-10-1986 specifically addressed the addition of charges for installation, erection, and commissioning in the ongoing works contract. The Tribunal highlighted that the classification of machinery as goods or immovable property was not in dispute. The Tribunal referred to its previous order, which clarified that for SSI exemption, only the value of goods manufactured and cleared should be considered, not the entire value of the work contract. Therefore, the Tribunal concluded that charges like erection and commissioning should not be included in the valuation of goods for determining SSI exemption eligibility. Consequently, the Tribunal set aside the previous order and allowed the appeal based on these considerations.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's reasoning behind its decision.