2016 (12) TMI 1259 - AT - Central Excise

Valuation - supply of bought out item with the manufactured goods - Held that - N.M.S. and L.C.T. softwares loaded on computers does not interfere with the normal telephone traffic and transmission equipments such as STM-1, STM-4 and STM-16 manufactured and supplied by them on whose assessable value duty was paid and that the respondents manufacture transmission equipment which are capable of functioning, without N.M.S. and L.C.T. software and that therefore they are independent entities and that just because they are supplied together, the value of N.M.S. and L.C.T. cannot become eligible to be included in the value of goods manufactured by them - Appeal dismissed - decided in favor of the assessee.

Summary

Issues:
Assessable value determination for excise duty on goods manufactured including bought out goods.

Analysis:
The case involved a dispute regarding the assessable value of goods for excise duty purposes. The respondents, engaged in manufacturing transmission equipment, supplied Synchronous Transport Module (STM) containing both self-manufactured parts and bought-out parts like L.C.T. and Network Manager. The Revenue contended that the value of bought-out goods should be included in the assessable value of the goods manufactured by the respondent. The Original Authority relied on a ruling by the Hon’ble Apex Court in the case of PSI Data Systems Ltd. Vs. CCE 1997(89)ELT 3(SC), stating that the value of additional items sold with the main product need not be included in the assessable value for excise duty purposes. The Original Authority, therefore, dropped the demand based on this ruling.

In the appeal before the Tribunal, the Revenue reiterated their grounds, arguing that the value of bought-out goods should be included in the assessable value. The respondent, through cross objections, contended that the N.M.S. or L.C.T. were separate entities installed to monitor the system of STM and did not interfere with the functioning of the main transmission equipment. They argued that the transmission equipment could function independently without the additional software, and therefore, the value of N.M.S. and L.C.T. should not be added to the assessable value of the goods manufactured by them.

After considering the arguments from both sides, the Tribunal found merit in the respondent's submission through the cross objection. They did not find any merit in the grounds put forth by the Revenue. Consequently, the Tribunal upheld the order passed by the Original Authority, dismissing the appeal filed by the Revenue. The Tribunal also ruled that the respondent would be eligible for consequential relief as per law. The cross objections were also disposed of in favor of the respondent.