2013 (8) TMI 846 - AT - Central Excise

Valuation - Inclusion of Installation and commissioning charges - Held that - contract entered between the appellant and M/s BSNL is relatable to two separate activities one for supply of the goods and the other for installation. The activity of installation and commissioning could have been got done by M/s BSNL from an independent third person. Merely because the said activity is being undertaken by the supplier of the goods does not mean that the consideration for the same has to be added in the assessable value of the goods. In any case, the appellant has already discharged their service tax liability in respect of the said consideration, in which case the same cannot be taxed to Central Excise duty - Following decision of Ericsson India Pvt. Ltd. vs. CCE, Pondicherry 2007 (2) TMI 26 - CESTAT, CHENNAI - Decided in favour of assessee.

Summary

Issues:
1. Demand of duty and penalty confirmed against the appellant for supply of internet nodes and installation/commissioning charges.
2. Whether installation and commissioning charges should be added to assessable value for duty payment.
3. Applicability of Central Excise duty when service tax already paid on installation and commissioning charges.

Analysis:
1. The judgment addressed the demand of duty amounting to Rs. 4,67,360 against the appellant, along with an equal penalty, for their contract with M/s BSNL involving the supply of internet nodes and installation/commissioning services. The Revenue contended that charges for installation and commissioning should be included in the assessable value of the nodes for duty payment.

2. The appellant argued that the installation and commissioning activity was distinct from the manufacturing activity and that they had already paid service tax on the consideration received for these services. Citing a previous Tribunal order in a similar case, the appellant contended that activities for which service tax was paid should not attract Central Excise duty.

3. The Tribunal agreed with the appellant's submissions, noting that the contract with M/s BSNL involved two separate activities: supply of goods and installation/commissioning. The Tribunal highlighted that the installation and commissioning could have been outsourced to a third party, and the fact that the supplier undertook these activities did not automatically require adding their charges to the assessable value of the goods. Moreover, since the appellant had already fulfilled their service tax liability on the installation and commissioning charges, the Tribunal ruled that such charges cannot be subjected to Central Excise duty.

4. Consequently, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant and providing consequential relief. The judgment clarified the distinction between the activities of supply and installation/commissioning, emphasizing that payment of service tax on the latter precludes the imposition of Central Excise duty on the same consideration.