2008 (3) TMI 214 - AT - Central Excise

Includibility of the value of tyres, discs, etc., supplied by their customers, in the assessable value of tractors/trailers manufactured - it is clearly brought out that the trailers manufactured were cleared as a complete trailers by the respondents and that they had fitted the tyres, discs, etc., to their manufactured goods before clearance hence value of these fitted bought out items is includable in the assessable value of the goods manufactured by the respondents

Summary

Issues:
- Appeal against reduction of excise duty demand
- Inclusion of value of tyres, discs, etc., in assessable value of tractors/trailers
- Reduction of demand by Commissioner (Appeals)
- Interpretation of Tribunal's decision in CCE v. Radiant Electronics Ltd.
- Inclusion of value of bought out items in assessable value
- Clearance of trailers as complete trailers by the respondents
- Duty payable calculation based on inclusion of fitted bought out items

Analysis:
The judgment deals with an appeal against the reduction of excise duty demand by the Commissioner (Appeals) concerning the inclusion of the value of tyres, discs, etc., in the assessable value of tractors/trailers manufactured by the respondents. The Commissioner had reduced the demand but did not consider the Tribunal's decision in CCE v. Radiant Electronics Ltd., which states that bought out items are not includable in the assessable value if they are not fitted or attached to the goods. However, in this case, the trailers manufactured were cleared as complete trailers with the fitted tyres, discs, etc., before clearance. Therefore, the Tribunal held that the value of these fitted bought out items is includable in the assessable value of the goods manufactured by the respondents.

The Tribunal observed that the value of tyres, discs, tubes, and flaps fitted to the trailers was sought to be included in the assessable value. The Commissioner (Appeals) reduced the demand based on a turnover calculation that exceeded the ceiling limit prescribed under the relevant SSI Notification 1/93-C.E. However, the Tribunal clarified that if bought out items essential for the operation of manufactured goods are fitted before clearance, their value is includable. In this case, since the trailers were cleared as complete trailers with the fitted items, the value of these items should be included in the assessable value.

The judgment highlights the importance of the Tribunal's decision in determining the inclusion of bought out items in the assessable value. It emphasizes that if bought out items essential for the operation of manufactured goods are fitted or attached before clearance, their value must be included. In this case, the trailers were cleared with the fitted tyres, discs, etc., leading to the conclusion that the value of these items should be part of the assessable value. As a result, the duty payable by the respondents was recalculated to be Rs. 5,48,150/-, overturning the Commissioner (Appeals)'s decision to reduce it to Rs. 2,18,000/-. The appeal was allowed based on this interpretation of the Tribunal's decision and the specific circumstances of the case.