2018 (7) TMI 1712 - AT - Central Excise

Valuation - transmission towers - inclusion of value of nuts and bolts in assessable value - case of the department is that the nuts and bolts are parts of transmission tower - appellant submits that the nuts and bolts are not used in the manufacture of their final product i.e. transmission towers. Nuts and bolts are bought out items and the same is traded by supplying the same directly from the supplier s to the site of the buyer of transmission towers. Held that - It is not in dispute that the nuts and bolts are bought out items and the same is not part of the manufacturing activity of the appellant. The said nuts and bolts were not brought into factory of the appellant. Hence the same is not taken part in the activity of manufacturing of transmission towers. The said nuts and bolts were supplied directly from supplier to site of the buyers. The goods manufactured and cleared by the appellant is the transmission towers in unassembled form which is only goods subject to assessment and the appellant have correctly discharged the duty on the said goods. The transaction of the nuts and bolts is clearly a trading activity on which neither the duty can be demanded nor the value thereof can be included in the value of transmission towers. The very same issue has been considered time and again by various forums such as this Tribunal, High Court and Supreme Court and consistently the bought out items supplied directly at site for erection installation commissioning of excisable manufactured goods the value of bought out items neither can be included in the value of such machine or even leviable to duty independently. Reliance was placed in the case of COLLECTOR OF CENTRAL EXCISE, BARODA VERSUS DODSAL PRIVATE LTD., BARODA 1986 (1) TMI 259 - CEGAT, NEW DELHI , where it was held that the activity would not come under the purview of a manufacture and the transmission towers which were erected at the site from the structural material would be permanent structures and would not admit of the definition or description of the goods. The nuts and bolts supplied directly to the supply of the supplier being out of the part of manufacturing of appellant is not liable for duty - Since the matter is decided on merit, there is no need to address the issue on limitation. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Whether the value of nuts and bolts, which are bought out items, should be included in the value of transmission towers for excise duty purposes.
2. Whether the demand related to the Show Cause Notice dated 12.03.2014 is time-barred due to the extended period and lack of suppression of facts.

Issue-wise Detailed Analysis:

1. Inclusion of Value of Nuts and Bolts in Transmission Towers:

The appellant contended that the nuts and bolts are not part of the manufacturing process of transmission towers but are bought out items used for erection and commissioning at the buyer's site. The nuts and bolts are directly supplied from the supplier to the buyer’s site and do not enter the appellant’s factory. Therefore, they argued that these items should not be included in the assessable value of the transmission towers and are not subject to excise duty. The appellant supported their argument with several judicial precedents, including the cases of CCE Bangalore vs. Electronics & Controls Power Systems P. Ltd., Kerala State Electronics Development Corporation Ltd vs. Commissioner of C.Ex. Cochin, and others.

The Revenue, on the other hand, argued that the nuts and bolts are essential parts of the transmission towers and their value should be included in the assessable value of the towers. They relied on various judgments to support their stance, including BSNL vs. CCE, Kolkata-III, CCE, Pune-I vs. Thermax Bobcock & Wilcox Ltd., and others.

The Tribunal found that the nuts and bolts are bought out items and not part of the manufacturing activity of the appellant. These items were not brought into the appellant's factory and were supplied directly to the buyer’s site. The Tribunal concluded that the transaction involving nuts and bolts is a trading activity, and neither duty can be demanded on these items nor can their value be included in the value of transmission towers. The Tribunal cited several judgments, including Dodsal Pvt. Ltd., S.A.E. (India) Ltd., and SS Engineers vs. CCE, to support their decision that bought out items supplied directly to the site for erection and commissioning do not attract excise duty and their value cannot be included in the assessable value of the manufactured goods.

2. Time-barred Demand Related to Show Cause Notice:

The appellant contended that the demand related to the Show Cause Notice dated 12.03.2014 is time-barred to the extent it pertains to the extended period because there was no suppression of facts. They argued that the facts were within the knowledge of the Revenue from the beginning, and the demand was raised without any malafide intention on their part. The appellant cited several judicial precedents, including Nizam Sugar Factory vs. Collector of CE, Andhra Pradesh Paper Mills Ltd vs. Collector of CE, and others, to support their argument.

The Tribunal agreed with the appellant, noting that the facts were known to the Revenue since the beginning and the previous demand against the appellant had been set aside by the Tribunal and upheld by the Hon’ble High Court. Therefore, there was no ground to raise the demand by invoking the extended period of limitation as there was no suppression or malafide intention on the part of the appellant.

Conclusion:

The Tribunal concluded that the nuts and bolts supplied directly to the buyer’s site are not part of the manufacturing process of transmission towers and their value cannot be included in the assessable value of the towers. The demand related to the Show Cause Notice dated 12.03.2014 was also found to be time-barred. Accordingly, the impugned order was set aside, and the appeal was allowed with consequential reliefs.

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