2010 (9) TMI 332 - AT - Central Excise

Bought out material Assessable value - whether the cost of battery bought out from the local market liable to be included in the assessable value of the UPSS - item cleared from the factory was UPSS without battery - place of clearance was the factory - goods should be assessed in the form it was cleared from the factory - appeal of the Revenue dismissed

Summary

Issues:
1. Inclusion of cost of battery in the assessable value of Uninterrupted Power Supply Systems (UPSS).
2. Treatment of branch offices as extensions of the factory.
3. Allegations in the show-cause notice and their relevance to the case.

Issue 1: Inclusion of cost of battery in the assessable value of UPSS:
The appeal considered whether the cost of batteries bought from the local market and included in UPSS by a company should be part of the assessable value. The Revenue contended that since batteries were added to UPSS at branch offices, the company should have paid duty on the complete system. However, the first appellate authority ruled against this, noting that the batteries were not part of the goods cleared from the factory. Previous tribunal decisions cited by the Revenue supported including the cost of batteries in the assessable value. The appellant argued that the branch office was an extension of the factory. Invoices from the branch office indicated that batteries were considered integral to UPSS.

Issue 2: Treatment of branch offices as extensions of the factory:
The Revenue's case was based on the premise that the branch offices were extensions of the factory where manufacturing activities took place. However, the show-cause notice did not allege that manufacturing occurred in the branch offices or that complete UPSS were cleared from the factory with batteries included. The Commissioner (Appeals) found that batteries were never brought to the factory and were sold from a depot, supporting the assessment of UPSS as cleared from the factory. The Tribunal noted that the Revenue's case was not consistent with the show-cause notice and lacked evidence from the company's books of accounts to support the manufacturing claim at branch offices.

Issue 3: Allegations in the show-cause notice and their relevance to the case:
The Tribunal emphasized that the show-cause notice did not align with the Revenue's argument in the appeal. It highlighted that the notice did not mention the branch offices as extensions of the factory or the clearance of complete UPSS with batteries. The absence of references to commercial invoices from branch offices and the lack of evidence from the company's books of accounts weakened the Revenue's case. The Tribunal upheld the lower appellate authority's decision, stating that the goods should be assessed based on how they were cleared from the factory, which did not include batteries.

This judgment clarifies the assessment of the assessable value of UPSS and the treatment of branch offices in relation to manufacturing activities. It underscores the importance of consistency between show-cause notices and arguments presented in appeals, as well as the necessity of supporting claims with appropriate documentation.