2006 (11) TMI 442 - AT - Central Excise

Summary

Issues:
Whether the cost of in-lining and out-coating of MS Pipes with cement mortar is includible in the assessable value.

Analysis:
The case involved an appeal against Orders-in-Appeal No. 110 & 111/2005 passed by the Commissioner of Customs & Central Excise (Appeals-III), Hyderabad. The dispute centered around whether the cost of in-lining and out-coating of MS Pipes should be included in the assessable value. The Original authority included the cost, while the Commissioner (Appeals) excluded it based on various case laws. The Revenue appealed on the grounds that the entire tender price should be considered for assessable value, citing a Supreme Court judgment where costs were deemed includible to make up the full commercial value. The Revenue also argued that since the in-lining and out-coating work was done by another unit not paying central excise duty, it should be included in the assessable value.

Upon hearing both sides, the Tribunal carefully reviewed the case records. The Tribunal noted that the in-lining and out-coating processes were carried out at the site after the MS Pipes were cleared from the factory, not within the factory premises. Drawing on precedents, the Tribunal referenced a Supreme Court decision and other Tribunal judgments to support its decision. It highlighted that when processes like coating are done outside the factory premises, they do not amount to manufacture and should not be included in the assessable value. The Tribunal specifically mentioned a case where coating of pipes at a job worker's independent factory was deemed not includible in the assessable value. In the present case, since the in-lining and out-coating were done at the site post-clearance from the factory, the Tribunal upheld the decision of the Commissioner (Appeals) to exclude these costs from the assessable value, ultimately rejecting the Revenue's appeals.