2007 (2) TMI 27 - AT - Central Excise

Valuation(Central Excise) Revenue alleged that services rendered for errection and installation of the equipment supplied by the appellant shall form part of the assessable value Authority rejecting the revenue allegation and allow the appeal

Summary

Issues:
1. Dispute regarding whether services rendered for erection and installation of equipment should form part of assessable value.

Analysis:
The Revenue appealed, arguing that services provided for erection and installation of equipment by the appellant should be included in the assessable value. They contended that the Commissioner (Appeals) had overlooked the obligation of the assessee to provide services as part of the sale. The Revenue sought a reconsideration of the issue in the interest of justice.

The assessee filed Cross Objections, asserting that the service charges received were not integrally connected with the cost of manufacture. They argued that the railway authorities could engage another agency for erection and installation. The first appellate order, which was reasoned and self-explanatory, was deemed satisfactory and did not warrant interference. The assessee highlighted that the service tax liability was specified in the work order for the specific services in question, and this provision did not require any modification to the appellate order. They emphasized that the payment terms in the supply order clearly delineated separate considerations for different obligations, including services and sale. Therefore, there was no justification for including service charges in the assessable value, especially since the charges had already been taxed and the service tax had been deposited. The assessee cited legal precedents, including a judgment of the Hon'ble Apex Court and decisions of two Tribunals, to support their argument that the services were separately rendered due to distinct contractual obligations.

After considering the arguments from both sides and reviewing relevant decisions, the Tribunal concluded that the sale was completely disintegrated from the services provided. The assessable value was found to have no association with the service consideration. Consequently, there was no requirement to combine the charges for erection and installation with the assessable value.

In the final judgment, the Tribunal dismissed the Revenue's appeal, upholding the decision to exclude the service charges from the assessable value. The Cross Objections filed by the assessee in support of the first appeal order were also dismissed.

This comprehensive analysis of the judgment highlights the key legal arguments, precedents cited, and the Tribunal's reasoning leading to the dismissal of the appeal and Cross Objections.