2014 (11) TMI 391 - AT - Central Excise

Valuation of goods - Inclusion of installation, erection and commissioning charges - erection, commissioning and installation activity undertaken and amount charged separately, cannot form part of the assessable value of the goods supplied - 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 Cranes & Hoists cannot be sustained in law as manufacture and rendering of services are distinct and different activities and have been taken under separate contracts - Following decision of De Nora India Ltd. - 2010 (5) TMI 749 - CESTAT MUMBAI and Nichrome Metals Works Pvt. Ltd. - 2000 (4) TMI 813 - Supreme Court of India - Decided in favour of assessee.

Summary

Issues:
Appeal against duty demanded on installation, erection, and commissioning charges included in assessable value.

Analysis:
The appellants, a manufacturer of Cranes & Hoists, cleared goods to customers and also undertook erection, commission, and installation of the goods at the customer's premises for which they charged separate fees. The Revenue demanded excise duty on these activities, claiming they are integrally connected with the sale of goods. The appellants argued that service charges should not be included in the assessable value of goods as manufacturing and service provision are distinct activities. The Tribunal noted previous decisions supporting this argument, such as De Nora India Ltd., Ashida Electronics Pvt. Ltd., and Puissance De DPK, along with a Supreme Court case involving Nichrome Metals Works Pvt. Ltd. The Tribunal agreed with these precedents, stating that erection, commissioning, and installation charges should not be included in the assessable value of goods. The impugned demands were deemed unsustainable in law, and the appeals were allowed with consequential relief as per legal provisions.

In conclusion, the Tribunal ruled in favor of the appellants, setting aside the impugned orders and allowing the appeals based on the principle that charges for erection, commissioning, and installation services should not be included in the assessable value of goods supplied. The distinction between manufacturing and service provision activities was crucial in determining the tax liability, as established by previous judicial pronouncements and upheld by the Tribunal in this case.