2018 (4) TMI 1157 - AT - Central Excise

Manufacture - Valuation - includibility - bought out items - case of appellant is that they are not clearing Boilers from their factory. In fact they are clearing parts from the factory and paying duty thereon - N/N. 6/2006 - CE dated 01.03.2006 - Held that - The appellant is clearing parts from factory to the site and certain bought out items are also directly supplied to the site from various vendors, on payment of duty. It is a fact on record that boiler in question emerges at site which become an immovable property, which is not excisable goods therefore, not leviable for duty. As the Boilers on which the Revenue is demanding duty are not excisable goods therefore, the question of payment of duty does not arise. Further, bought out items have never came to the factory of the appellant and the appellant is liable to pay duty only on the goods manufactured by them. In that circumstance, for the bought items, the appellant is not required to pay duty. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether the value of bought out items should be added in the assessable value of parts cleared from the factory.
- Whether duty is payable on goods manufactured by the assessee.
- Whether the appellant is liable to pay duty only on the goods manufactured by them.

Analysis:
- The appellant filed appeals against orders passed by the Commissioner regarding the inclusion of the value of bought out items in the assessable value of parts cleared from the factory. The appellant, a manufacturer of boiler parts, avails exemption under a specific notification. The Revenue contended that as the appellant had composite work orders for Boiler erection, commissioning, and installation at the site, the value of bought out items should be added to the assessable value. Show cause notices were issued, demanding duty, interest, and imposing penalties. The appellant argued they were not clearing boilers but parts, and duty was paid accordingly. The bought out items never entered the factory, so their value should not be added to the assessable value. The Tribunal noted that the boilers were not excisable goods, and duty was not leviable on them. As the bought out items never reached the factory, duty was only payable on goods manufactured by the appellant. Citing relevant case laws, the Tribunal held the demands in the impugned orders were unsustainable, setting them aside and allowing the appeals with consequential relief.

- The appellant contended that duty should only be paid on goods they manufactured, not on bought out items. The appellant's position was that since the bought out items never entered their factory, duty should not be levied on them. The appellant relied on legal precedents to support their argument. The Revenue, however, reiterated the findings of the impugned order, insisting on the duty payment for the bought out items. After hearing both parties, the Tribunal found that the appellant was indeed liable to pay duty only on goods manufactured by them. Since the bought out items did not come to the factory, no duty was required to be paid on them. Consequently, the Tribunal held that the demands made in the impugned orders were not sustainable, leading to the orders being set aside.

- The core issue revolved around whether duty should be paid on the bought out items in addition to the goods manufactured by the appellant. The appellant argued that duty should only be levied on goods they produced, not on items bought from external vendors. The Tribunal examined the facts, noting that the boilers in question were not excisable goods. As a result, duty was not applicable to them. Since the bought out items did not enter the appellant's factory, duty obligations were limited to goods manufactured by the appellant. Relying on legal principles and case laws, the Tribunal concluded that the demands in the impugned orders were unsustainable. Therefore, the Tribunal set aside the orders, allowing the appeals and providing consequential relief to the appellant.