2016 (1) TMI 201 - AT - Central Excise

SSI Exemption - valuation - clandestine removal of goods - allegation on the basis that appellant issued parallel invoices for bought out items and did not include the value of bought out items in the value of manufactured goods. - manufacture of beer/IMFL machinery and storage tanks for storing/processing beer - The appellants defended the notice contending that each tank is made as per requirement of the buyer and cannot be used by another buyer. Held that - Apparently the invoices are not issued from same book. The learned counsel has explained this stating that in the cases where bought out items were supplied the invoices in one book was issued and then when manufactured tanks were cleared without bought out items invoices from another book was being issued by the accountant. On checking the description of goods in these invoices we have to say that this explanation is satisfactory. Further, merely because the invoices issued did not follow their sequential number it is not sufficient to hold that these are parallel invoices. The figures in these invoices tally with accounts. Further the department has investigated with the transporters M/s. Doors Transport Ltd. No discrepancy was detected. The allegation that appellant suppressed facts by issuing parallel invoices is factually wrong. Inclusion of value of bought out items in the Gross Value - Held that - The bought out items are used for erection/installation of the tank in the buyers premises and to connect the tank/machinery to other parts of brewery plant. The bought out items are also as per specifications of each tank. The tank and bought out items along with other machinery goes to form the brewery plant. The photograph of the plant with tanks was placed before us. On the look of these photographs, we have to say that the brewery plant is a massive structure and if once structured and fixed to the ground, it cannot be dismantled and transported without damaging it. Therefore, the case of the department that appellants manufactured complete plant and the bought out items are part of the complete plant manufactured by the appellant is untenable. - the plea of the appellant that bought out items are not part of the excisable goods is acceptable. - Decided in favor of assessee.

Summary

Issues:
1. Allegation of wrongly availing SSI exemption benefit by the appellant.
2. Discrepancy regarding the inclusion of value of bought out items in the manufactured goods.
3. Allegation of issuing parallel invoices by the appellant.
4. Whether bought out items are essential parts of manufactured goods.
5. Applicability of previous judgments on similar issues.

Issue 1: Allegation of wrongly availing SSI exemption benefit
The appellant, engaged in manufacturing beer machinery and storage tanks, was accused of crossing the limit for availing SSI exemption benefit. A search revealed clearances exceeding the exemption limit, leading to a show cause notice. The appellant argued that the value of bought out items should not be added to the manufactured goods' value as each tank was custom-made and not part of an entire plant. The original authority dropped the demand, but the Commissioner (Appeals) upheld it, resulting in the appeal before the Tribunal.

Issue 2: Discrepancy regarding the inclusion of value of bought out items
The appellant contended that bought out items were not part of the manufactured goods, as they only produced parts of brewing plants, specifically storage tanks. These tanks were customized and required additional items for installation, which were either bought from the market or by the buyer. The appellant's argument focused on the separate nature of bought out items and the process of invoicing for transparency. The department claimed that the cost of bought out items should be included in the manufactured goods' price, leading to duty demand and penalty imposition.

Issue 3: Allegation of issuing parallel invoices
The allegation of issuing parallel invoices for bought out items was refuted by the appellant, explaining the sequential break in invoices due to separate books for different transactions. The Tribunal found the explanation satisfactory, emphasizing that discrepancies were absent in the accounts and invoices, and the allegation of suppression was baseless.

Issue 4: Whether bought out items are essential parts of manufactured goods
The main issue revolved around whether bought out items were integral to the manufactured goods. The Tribunal examined the structure of the brewery plant, concluding that the bought out items were not essential parts of the finished goods. Citing a relevant judgment, it was established that the value of bought out items need not be included in the assessable value of the goods, supporting the appellant's position.

Issue 5: Applicability of previous judgments on similar issues
The Tribunal relied on a previous judgment regarding the valuation of bought out items in a similar context, reinforcing the appellant's argument. By setting aside the impugned order, the Tribunal allowed the appeal, granting consequential reliefs as applicable.

This detailed analysis covers the various issues addressed in the legal judgment, providing a comprehensive understanding of the case and the Tribunal's decision.