2014 (8) TMI 468 - AT - Central Excise

Valuation of goods - manufacturing of Lift/Elevator - inclusion of value of erection, commission and installation activities in the assessable value - Held that - Tribunal has consistently held that erection, commissioning and installation activity undertaken and amount charged separately, cannot form part of the assessable value of the goods supplied. Some of these decisions are De Nora India Ltd. - 2010 (5) TMI 749 - CESTAT MUMBAI , Ashida Electronics Pvt. Ltd. - 2011 (6) TMI 419 - CESTAT, DELHI and Puissance De DPK - 2013 (7) TMI 564 - CESTAT CHENNAI . The Hon ble Apex Court has also considered this matter in the case of Nichrome Metals Works Pvt. Ltd. - 2000 (4) TMI 813 - Supreme Court of India in the order passed by the Tribunal and reported in 1996 (9) TMI 297 - CEGAT, NEW DELHI , wherein the Tribunal held that erection, commissioning and installation charges should not be included in the assessable value of the goods supplied and dismissed the appeal filed by the Revenue against the Tribunal s order. In view of the above judicial pronouncements with which we respectfully agree, we find that the impugned orders are not sustainable in law and the demands of duty made by including the erection, commissioning and installation charges in the assessable value of the lift/elevators cannot be sustained in law as manufacture and rendering of services are distinct and different activities and have been taken under separate contracts. - Decided in favour of assessee.

Issues involved: Appeal against Order-in-Appeal regarding inclusion of erection, commission, and installation charges in the assessable value of goods supplied.

Analysis:
1. Common Issue: The appeals were directed against three orders passed by the Commissioner of Central Excise (Appeals) involving a common issue. The issue was whether charges for erection, commission, and installation of goods should be included in the assessable value of the goods supplied.

2. Appellant's Argument: The manufacturer, M/s Hercules Hoists Ltd., cleared goods to customers and also undertook erection, commission, and installation of lift/elevators upon customer request, charging separate commissioning and installation fees. They contended that these charges for services rendered should not be part of the assessable value of goods supplied, as services and manufacturing are distinct activities.

3. Revenue's Position: The Revenue argued that the activities of erection, commissioning, and installation are integrally connected with the sale of goods and thus should be included in the assessable value of the goods supplied.

4. Judicial Precedents: The Tribunal noted previous decisions where it was held that charges for erection, commissioning, and installation, when separately charged, should not be included in the assessable value of goods supplied. References were made to cases like De Nora India Ltd., Ashida Electronics Pvt. Ltd., and Puissance De DPK, along with a Supreme Court case involving Nichrome Metals Works Pvt. Ltd.

5. Decision: After considering both parties' submissions and the judicial precedents, the Tribunal found that the impugned demands to include erection, commissioning, and installation charges in the assessable value of goods were not sustainable in law. The Tribunal set aside the impugned orders and allowed the appeals, providing consequential relief as per the law.

This detailed analysis of the judgment highlights the key arguments, legal principles, and the ultimate decision reached by the Appellate Tribunal CESTAT MUMBAI regarding the inclusion of erection, commission, and installation charges in the assessable value of goods supplied.

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