2005 (8) TMI 16 - AT - Central Excise

(1) New grounds before Commissioner (Appeal) and (2) Assessable Value - Value of bought out items sent directly to customer or sub-contracted

Summary

Issues involved:
- Appeal against Order-in-Appeal No.213/98 dated 26.6.98 passed by the Commissioner of Central Excise (Appeals), Chennai
- Demand of excise duty on total value of supplies made by manufacturer of fire protection system
- Inclusion of bought-out components in assessable value
- Permissibility of fresh points in appeal not raised in reply to Show-cause notice

Analysis:
1. The appeal was filed by the Revenue against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals) regarding the demand of excise duty on the total value of supplies made by the manufacturer of fire protection system. The original authority had imposed penalties under Section 11AC of the Central Excise Act and Rule 173Q of the CE Rules. The Commissioner (Appeals) held that only the value of manufactured items would be dutiable when they leave the factory, excluding bought-out components. The Revenue contended that the respondents did not dispute the duty demanded in the Show-cause notice and raised fresh points in appeal not raised earlier, which is impermissible under Rule 23 of the CESTAT (Procedure) Rules, 1982.

2. The Revenue's representative reiterated the grounds of appeal, while the respondents' consultant argued that the Commissioner (Appeals) considered all facts and made a lawful decision. The consultant highlighted that items purchased and directly dispatched to customers' sites were recorded in the original order, along with erection and commissioning details. The consultant emphasized that no new facts were presented before the Commissioner (Appeals).

3. The Tribunal carefully examined the case records and noted that there was no evidence of the respondents presenting additional evidence before the Commissioner (Appeals). Despite Rule 23 restricting the introduction of new evidence, the Commissioner (Appeals) has the authority to consider fresh legal points even if not raised before the original authority. The Commissioner (Appeals) correctly analyzed the facts and law, determining that only items manufactured by the respondents should be subject to duty. The Tribunal found that the Commissioner (Appeals) decision was in line with Central Excise Law, rejecting the Revenue's appeal for lacking merit.

In conclusion, the Tribunal upheld the Commissioner (Appeals) decision, emphasizing the exclusion of bought-out components from the assessable value and affirming that only manufactured items should be subjected to duty. The Tribunal highlighted the permissibility of fresh legal points in appeals, even if not raised before the original authority, as long as they fall within the scope of the case.