2011 (8) TMI 731 - AT - Central Excise

Valuation - manufacturing of UPS - inclusion of cost of the battery - Held That - In view of Walchandnagar Industries Ltd. vs. CCE (2011 - TMI - 207438 - CESTAT MUMBAI) value of bought out items is required to be added in the assessable value. Period of limitation - Show cause notice issued on 16.7.99 - Duty Demanded for 20.11.96 to 16.7.97 - New unit Duty demanded for first time - Held That - Adjudicating authority has not given any finding on account of any mis-representation or suppression of facts demand is hit by time limitation

Summary

Issues:
- Inclusion of cost of batteries in the assessable value of UPS systems for charging duty
- Time limitation for demanding duty for a specific period

Analysis:

Issue 1: Inclusion of cost of batteries in the assessable value of UPS systems for charging duty
The case involved a dispute regarding the inclusion of the cost of batteries in the assessable value of UPS systems for charging duty. The Revenue contended that the batteries were an integral part of the UPS system and should be included in the assessable value. The Revenue relied on previous decisions and argued that the value of bought-out items, such as batteries, should be added to the assessable value. The Tribunal noted that in a similar case involving the respondent's Pune unit, the CEGAT had set aside the order dropping the demand for the value of bought-out items. The Tribunal found no reason provided by the Commissioner (Appeals) for setting aside the original order. Considering the precedent and the Revenue's argument, the Tribunal held that the value of bought-out batteries should indeed be included in the assessable value of the UPS systems.

Issue 2: Time limitation for demanding duty for a specific period
The second issue revolved around the time limitation for demanding duty for a specific period. The show-cause notice was issued on a certain date, demanding duty for a specified period. The respondent contested the demand, citing time limitation. The original authority, however, held that since it was a new unit and the case was detected for the first time, there was no time bar. The Tribunal observed that the adjudicating authority did not find any misrepresentation, misdeclaration, or suppression of facts. In the absence of such findings, the Tribunal concluded that the demand was indeed hit by time limitation. Therefore, the demand for duty for the specified period was not sustainable due to the absence of evidence of misrepresentation or suppression of facts.

In conclusion, the Tribunal upheld the inclusion of the cost of batteries in the assessable value of the UPS systems for charging duty based on precedent and legal arguments. Additionally, the Tribunal found the demand for duty for a specific period to be time-barred due to the absence of evidence of misrepresentation or suppression of facts. The appeal was disposed of accordingly.