2013 (12) TMI 398 - AT - Central Excise

Valuation of Goods Goods cleared under CKD Condition to be added in the value of goods cleared or not Held that - There is no evidence to show that the items procured from the market were taken to the factory and cleared with the manufactured parts - there is no finding in the order regarding the excisability of the conveying system as a whole Relying upon Mil India Ltd. vs. CCE, Noida 2007 (3) TMI 8 - SUPREME COURT OF INDIA - the value of bought out items should be added for computing assessable value would depend on the facts of each case - for the subsequent period, the demand of duty which was made on the grounds is dropped by the Commissioner of Central Excise - On the last date of hearing, the matter was adjourned to find out whether the Revenue has filed any appeal against this order. The learned AR produced a communication from the office of the Chief Commissioner of Central Excise, where it has been stated that the order passed by the Commissioner of Central Excise is accepted by the Revenue - the matter requires reconsideration by the Adjudicating authority afresh after taking into consideration the subsequent decision of the Commissioner of Central Excise - order set aside and the matter remanded to the adjudicating authority for de novo adjudication Decided in favour of Assesssee.

Summary

Issues:
- Confirmation of demand under Section 11AC of the Central Excise Act for clearing 'complete dense phase pneumatic ash handling system' in CKD condition.
- Excisability of the complete ash handling system and whether the value of bought-out items should be added to the assessable value of parts manufactured by the appellants.
- Applicability of Notification No. 67/95-CE exempting duty on capital goods manufactured in the factory.
- Interpretation of relevant case laws by both parties regarding the excisability of the system and addition of value of bought-out items for computing assessable value.
- Reconsideration of the matter by the adjudicating authority in light of subsequent decision dropping the demand and the law laid down by the Hon'ble Supreme Court.

Analysis:
The appellant appealed against an order confirming a demand under Section 11AC of the Central Excise Act for clearing a 'complete dense phase pneumatic ash handling system' in CKD condition. The dispute revolved around whether the value of bought-out items should be added to the assessable value of parts manufactured by the appellants. The appellants argued that the system was not excisable as it was permanently embedded in the earth, citing a Supreme Court decision on marketability. They also relied on a Board circular clarifying the treatment of parts brought together at the site. Additionally, they claimed exemption under Notification No. 67/95-CE for capital goods manufactured and used in the factory.

The Revenue contended that the system was excisable based on the turnkey contract for setting up the handling system. They cited Supreme Court decisions to support adding the value of bought-out items for computing the assessable value in composite contracts. The Revenue highlighted the importance of the excisability of the system and relied on previous judgments to justify the demand.

The Tribunal found discrepancies in the evidence and lack of clarity on the excisability of the conveying system as a whole in the impugned order. Considering the subsequent decision dropping the demand and the acceptance of that decision by the Revenue, the Tribunal set aside the impugned order and remanded the matter for fresh adjudication by the Commissioner of Central Excise. The Tribunal emphasized the need for a reconsideration of the case in light of the subsequent developments and relevant legal principles cited by both parties, leaving all contentions open for further examination.