2016 (6) TMI 1019 - AT - Central Excise

Valuation - inclusion of the value of ECP while discharging the duty liability on RMPU - manufacture of Roof Mounted Package units (RMPU) and Electric Control Panels (ECP) for supply to the Indian Railways for air-conditioning the railway coaches - Held that - The point for decision is whether or not to add the value of ECP in the value of RMPU for discharging duty liability. It is an admitted fact that RMPU is an air-conditioning machine falling under heading 8415 and ECP is an Electric Control Panel falling under Heading 8537. Merely because, these two items were designed for a combined working after installing them on the railway coaches does not automatically mean the value of one should be added in the other for central excise purpose. - Demand set aside - Decided in favor of assessee.

Issues:
- Differential duty on Roof Mounted Package units (RMPU) and Electric Control Panels (ECP) for air-conditioning railway coaches.
- Application of Section Notes-2 and 3 of Section XVI.
- Classification of RMPU as an air-conditioning machine.
- Value of ECP to be added in the assessment of RMPU for duty liability.

Analysis:

1. Differential Duty on RMPU and ECP:
The case involved the recovery of a differential duty amounting to ? 44,10,895 on the appellant for not including the value of Electric Control Panels (ECP) while discharging the duty liability on Roof Mounted Package units (RMPU) supplied to the Indian Railways for air-conditioning railway coaches. The Original Authority confirmed the demand and imposed a penalty of an equivalent amount on the appellant.

2. Application of Section Notes-2 and 3 of Section XVI:
The appellant contested the assessment, arguing that Note-3 of Section XVI was incorrectly applied in their case. They claimed that the interpretation of Section Notes-2 and 3 was misapplied without reference to the facts, asserting that RMPU should be considered as an air-conditioning machine and not merely as parts.

3. Classification of RMPU as an Air-Conditioning Machine:
The appellant further argued that RMPU should be assessed as a machine and not just as an air-conditioning system. They highlighted that the Railways procured RMPU and ECP separately from different manufacturers, and when RMPU was cleared without ECP, it was assessed as an air-conditioning machine under a specific heading, not as parts.

4. Value of ECP for Duty Liability Assessment:
The main issue for decision was whether the value of ECP should be added to the assessment of RMPU for discharging duty liability. The Tribunal analyzed the nature of RMPU as an air-conditioning machine and ECP as an Electric Control Panel under different headings. They referred to previous Tribunal decisions in similar cases, emphasizing that ECP cannot be treated as an integral part of RMPU for central excise purposes.

5. Judicial Precedents and Decision:
The Tribunal referred to previous judgments in cases with similar facts. In the case of Sidwal Refrigeration Ltd., it was held that the different parts of an air-conditioning system should be assessed separately, and ECP cannot be considered an integral part of RMPU. Similarly, in the case of Intec Corporation, it was established that electric control panels are classifiable under a specific heading, and the classification should be determined according to the terms of the headings and relevant notes.

6. Final Decision:
Based on the settled legal position and precedents, the Tribunal found no merit in the impugned order. Consequently, the Tribunal set aside the demand for the differential duty and penalty, allowing the appeal in favor of the appellant.

This detailed analysis of the judgment highlights the key issues, arguments presented, legal interpretations, and the final decision rendered by the Appellate Tribunal CESTAT NEW DELHI in the case.

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