1984 (12) TMI 307 - AT - Central Excise

Summary

Issues:
1. Inclusion of the value of an extra water tank in the assessable value of coolers for excise duty calculation.

Analysis:
The judgment by the Appellate Tribunal CEGAT New Delhi involved a dispute regarding the inclusion of the value of an extra water tank in the assessable value of coolers for excise duty calculation. The appellants, manufacturers of evaporative coolers supplied on rate contract basis to DGS & D, faced differential duty demands based on show cause notices issued for clearances between specific periods. The controversy arose due to the inadvertent inclusion of the water tank price in the cooler's assessable value. The appellants argued that the water tank was optional and not an integral part of the cooler, citing the separate listing and pricing of the tank in the rate contract schedule. They contended that excise duty was charged on the added value during the period of inadvertent inclusion. The Department, however, emphasized the composite nature of the contract and the absence of evidence showing separate supply of the water tank. The Tribunal had to determine whether the water tank should be considered part of the main unit for excise duty calculation.

The consultant for the appellants argued that the extra water tank should not be included in the assessable value of the coolers as it was optional and not an integral part of the unit. He referenced a ruling where a similar situation was distinguished, emphasizing that the water tank was not a separately assessable component. The Department, on the other hand, highlighted the contractual terms and the absence of evidence supporting the separate supply of the water tank. They contended that the water tank formed an integral part of the main unit, as indicated by the composite nature of the contract and the pricing structure. The Tribunal observed that the water tank was charged separately to customers and excise duty was collected on the combined price of the cooler and tank. They noted the distinct listing and pricing of the water tank in the rate contract schedule, supporting the Department's argument regarding the composite nature of the contract.

Ultimately, the Tribunal dismissed all four appeals, finding no merit in the appellants' arguments. They held that the water tank was considered an integral part of the main unit based on the contractual terms, pricing structure, and lack of evidence supporting its separate supply. The Tribunal's decision rested on the interpretation of the contract terms and the treatment of the water tank as part of the cooler for excise duty calculation purposes.