2018 (4) TMI 902 - AT - Central Excise

Valuation - inclusion of bought out items in assessable value - The case of the department is that nuts, bolts and other accessories supplied directly to the site, the value of the same should be included in the value of the towers - Held that - the appellant is engaged in the manufacture of transmission line towers. The entire activity of the manufacturing is completed without the need of nuts bolts etc. The bought out nuts bolts were sent directly from the supplier to the customer s site. Therefore, the same is obviously not taking part in the manufacture of the final product of the respondent. Any additional consideration can be included in the assessable value of the goods manufactured and sold - In the present case, the goods in question is transmission line towers, which is manufactured and sold by the respondent. The nuts and bolts etc. are optional item which is sold as a bought out item to the customers, which is nothing but a trading activity. Therefore, the same cannot be considered as extra consideration towards the manufacture of excisable goods produced by the respondent. The value of nuts bolts etc. is not includible in the assessable value of the transmission line towers manufactured by the respondent - appeal dismissed - decided against Revenue.

Summary

Issues:
Whether the value of bought out nuts, bolts, and accessories supplied directly to the site should be included in the value of transmission towers for excise duty calculation.

Analysis:
The case involved a dispute regarding the inclusion of the value of bought out nuts, bolts, and accessories directly supplied to the site in the assessable value of transmission towers for excise duty calculation. The Revenue contended that these items, being integral parts of the towers, should be included as per Section 4(3)(d) of the Central Excise Act, 1944. They relied on various decisions to support their argument, emphasizing the necessity of these items for the towers' operation. On the other hand, the respondent argued that these items were solely for erection and installation purposes, distinct from the manufacturing process of the towers. They cited judgments highlighting that items used for erection at the site do not form part of the excisable goods.

The Tribunal carefully considered both arguments and observed that the manufacturing of transmission towers was complete without the bought out items. The items were directly sent to the customer's site and did not contribute to the manufacturing process. The Tribunal noted that any additional consideration should be related to the goods manufactured and sold, which, in this case, were the transmission towers. The bought out items were optional and sold separately, akin to a trading activity. The lower authorities correctly analyzed the issue and concluded that the value of these items should not be included in the assessable value of the towers.

The Commissioner (Appeals) also examined the case thoroughly, noting that the bought out items were not manufactured or cleared by the respondent. The definition of transaction value was crucial, emphasizing that it should be linked to the excisable goods manufactured by the respondent. The Commissioner distinguished various judgments cited by the Revenue, highlighting that the bought out items were not essential components of the towers. The Tribunal concurred with the lower authorities' findings, upholding the impugned order and dismissing the Revenue's appeal. The judgment was pronounced on 21.03.2018.