2013 (7) TMI 534 - HC - Central Excise

SSI Exemption - Determination of turnover - manufacturing of D. G. Sets - inclusion of Installation and testing charges - whether Installation and commissioning is a different activity and shall not form part of assessable value Held that - Appellant is a manufacturer of D. G. Sets. A D.G. Set which were cleared without entering it in RG-1 Register - D. G. Set was sold to Sri Ajay Kumar Jain Barabanki without issuing any Central Excise invoice and without payment of Central Excise duty. Further, two D. G. Sets were cleared to La Martenies Boy s Inter College, Lucknow; and Bank of India, Barabanki respectively. But the said sales were willfully suppressed. The installation and testing charges are not shown separately by the appellant in the tenders, while they have paid duty on the invoices after deducting the same from the price which is not as per provisions of the Central Excise law. No bifurcation was mentioned as per section 4 of the Central Excise Act, 1944 Decided against the Assessee.

Summary

Issues:
- Challenge against judgment and order passed by Customs, Excise and Service Tax Appellate Tribunal, New Delhi
- Duty demand and penalty imposed on the appellant
- Inclusion of installation and testing charges in assessable value
- Allegations of suppression of sales and non-payment of Central Excise duty
- Applicability of SSI exemption and exceeding prescribed limits

Analysis:

The case involves an appeal under section 35-G of the Central Excise Act, 1944 against a judgment and order passed by the Customs, Excise and Service Tax Appellate Tribunal. The appellant, engaged in manufacturing D. G. Sets, challenged various additions and penalties made by the Tribunal, focusing on the duty demand of Rs.19,58,726/- and an equal penalty amount. The appellant's counsel argued that installation and testing charges should not be part of the assessable value, especially considering the unit's status as a small scale industry. The appellant contended that the demand was unsustainable in the eyes of the law, emphasizing that the supply of D. G. Sets was part of a composite contract involving post-manufacturing activities.

On the other hand, the department's counsel supported the impugned order, highlighting instances where the appellant allegedly failed to pay Central Excise duty and suppressed sales. It was revealed that the appellant had exceeded the prescribed limit for SSI exemption and had not reflected all sales in the daily stock register. The Tribunal found the demand for duty valid, as the installation and testing charges were not separately shown in tenders, leading to a lack of bifurcation as required by the Central Excise Act, 1944. The Tribunal rejected the appellant's claim that these charges were not part of their manufacturing activities, citing agreements that included such charges in tender prices without corresponding duty payments.

Ultimately, the High Court upheld the Tribunal's order, stating that there was no reason to interfere with it. The appeal was dismissed at the admission stage due to its lack of merits. The judgment emphasized the importance of compliance with excise laws and the proper valuation of goods for duty assessment purposes.