2019 (2) TMI 340 - AT - Central Excise

Valuation - manufacture of various machines - inclusion of value of installation services provided, in the assessable value of the machines - Held that - The earlier order of the Tribunal directed the Revenue to re-decide the issue, after appreciating the fact that the Managing Director of the company, in his statement, has only pointed out to three such orders with their customers where the bifurcation has taken place. In respect of the balance transactions, Tribunal has remanded the matter for verification of the documentary evidences in respect of the remaining transactions, entered vide their purchase orders, by which the contracts were entered into between the appellant and their customers. The impugned order is required to be set aside and the matter is once again required to be remanded to the original adjudicating authority to give a detailed finding after verifying each and every contract entered between the appellant and their customers - appeal allowed by way of remand.

Issues:
1. Splitting of invoice value by showing part as installation charges.
2. Confirmation of demand of duty of excise.
3. Discharge of Service Tax liability.
4. Imposition of penalty and interest.
5. Verification of documentary evidence and contracts.

Issue 1: Splitting of invoice value by showing part as installation charges
The Tribunal found that the appellant, engaged in manufacturing machines, had split invoice values to show part as installation charges, reducing the assessable value of the machines supplied. The department initiated proceedings proposing confirmation of excise duty demand. The Tribunal observed that the appellant admitted to splitting values in certain cases only, not all. The matter was remanded for detailed verification at the original level.

Issue 2: Confirmation of demand of duty of excise
The Additional Commissioner confirmed duty for the period pre-July 2003, as the appellant discharged Service Tax liability for installation services post-July 2003. A penalty and interest were imposed. The appellant contested, providing evidence that diversion of machine value towards installation charges was limited to three cases only. The Tribunal found discrepancies in the Additional Commissioner's reliance on extraneous considerations, ordering a detailed verification of all contracts.

Issue 3: Discharge of Service Tax liability
The Additional Commissioner dropped the demand for the period post-July 2003, citing the discharge of Service Tax liability for installation services. However, duty was confirmed for the period pre-July 2003. The appellant argued that the diversion of machine value towards installation charges was minimal, supported by documentary evidence showing low percentages compared to the alleged 40%.

Issue 4: Imposition of penalty and interest
The Additional Commissioner imposed penalties and interest for the pre-July 2003 period. The appellant challenged this, highlighting discrepancies in the findings and evidence presented. The Tribunal noted the need for a detailed examination of each contract to determine the actual percentage of installation charges, ordering a remand to the original adjudicating authority.

Issue 5: Verification of documentary evidence and contracts
The Tribunal emphasized the importance of verifying documentary evidence and contracts to establish the actual extent of splitting invoice values for installation charges. The appellant provided sample purchase orders showing low percentages for installation services compared to the alleged 40%. The Tribunal directed a detailed examination of all contracts to ascertain the accuracy of the installation charges, setting aside the impugned order for a remand to the original adjudicating authority.

← Previous Next →