2017 (6) TMI 466 - AT - Central Excise

Valuation - installation charges - includibility - Held that - CBEC vide circular No.643/34/2002-CX dated 01/07/2002 clarifies that if the expenditure on installation and commissioning has been incurred to bring into existence any excisable goods then such charges should be included in the assessable value of the goods - In the instant case the goods were not coming into the existence at the premises of purchaser but they had already come into existence at the manufacturing premises of appellant who has paid Central Excise Duty on the same before the clearance of the same from the factory - the said clarification is not applicable in the present case. The decision in the case of Greysham & Company 2014 (10) TMI 443 - CESTAT NEW DELHI is squarely applicable in present case wherein it was held that installation of the Air Break Equipment has nothing to do with the manufacturer of the said equipments and hence the charges for installation of the same are not includable in the assessable value of Air Break Equipment. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Inclusion of installation charges in the assessable value for computation of Central Excise Duty.
2. Applicability of CBEC circular on inclusion of installation charges.
3. Precedent decision of the Tribunal on the issue.

Issue 1: Inclusion of installation charges in the assessable value for computation of Central Excise Duty:
The case involved the question of whether installation charges collected by the appellant should be included in the assessable value for the computation of Central Excise Duty. The appellant, a manufacturer of various goods, was issued show cause notices for different periods demanding duty on the component of installation charges. The Original Authority confirmed the demand and imposed penalties, which were upheld by the Commissioner (Appeals). The appellant argued that the installation charges were separately mentioned in the invoices or recovered through debit notes. The Tribunal analyzed that the goods were already in existence at the manufacturing premises before being cleared, and hence, the charges for installation were not includable in the assessable value. Citing a precedent decision, the Tribunal ruled in favor of the appellant and allowed both appeals.

Issue 2: Applicability of CBEC circular on inclusion of installation charges:
The Department argued that the issue of including installation charges was clarified by a CBEC circular, which stated that such charges should be included in the assessable value if incurred to bring excisable goods into existence. However, the Tribunal found that in the present case, the goods were already manufactured and duty paid before clearance, making the circular inapplicable. The Tribunal's decision was influenced by the fact that the installation of goods did not affect their manufacturing process, as seen in a precedent case.

Issue 3: Precedent decision of the Tribunal on the issue:
The Tribunal referred to a previous case where it was held that charges for the installation of certain equipment were not includable in the assessable value as they were unrelated to the manufacturing process. Relying on this precedent decision, the Tribunal concluded that the installation charges in the current case should also not be included in the assessable value for Central Excise Duty computation. Consequently, both appeals were allowed, and the appellant was granted consequential relief as per the law.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, relevant legal principles, and the Tribunal's decision based on precedent and legal interpretation.