2019 (3) TMI 787 - AT - Central Excise

Valuation - waste heat recovery boilers - inclusion of bought out materials like valves (manual/motor operated), PLC based BMS panel, I.D. Fan for boiler, inlet/outlet cones, side frames, panel for soot blowers, soot blowers, aluminum cladding, silencers for boilers etc. in assessable value - Held that - The facts of the case are not disputed that the respondent is a manufacturer of waste heat recovery boilers and he is engaged in supply of waste heat recovery boilers to various customers who places an order on them for supply of waste heat recovery boilers. The respondent herein is procuring few items from the market like valves, PLC based BMS panel, I.D. Fan for boiler, inlet/outlet cones, side frames, panel for soot blowers, soot blowers, aluminum cladding, silencers for boilers etc., which are directly supplied by the suppliers at the site and it is also undisputed that the said suppliers discharge the applicable central excise duty on these parts when directly supplied at the site and respondent is not availing any CENVAT credit on the said parts. It is undisputed, in the case in hand, that after clearing the boilers from the factory premises and by assembling them at the site of customers along with bought out items, the waste heat recovery boilers become immovable. If that be the case, the reasoning adopted by the adjudicating authority, in the case in hand, in the impugned order is correct, legal and does not require any interference. Credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
Valuation of bought out items for central excise duty on waste heat recovery boilers.

Analysis:
The appeal was filed by Revenue against an Order-in-Original regarding the valuation of bought out items for central excise duty on waste heat recovery boilers. The respondent, a manufacturer of waste heat recovery boilers, procured certain bought out items like valves, PLC panel, and silencers, which were directly delivered to the clients' premises. Revenue authorities contended that the value of these bought out items should be included in the valuation for central excise duty. However, the adjudicating authority, after due process, concluded that the bought out items need not be included in the valuation of the boilers. The Revenue challenged this decision, leading to the appeal.

The Revenue argued that the bought out items were essential and integral parts of the manufactured boilers, forming a composite work order, and should be included in the assessable value. They relied on a Tribunal judgment upheld by the Supreme Court to support their position.

On the other hand, the respondent contended that the orders were for the supply of waste heat recovery boilers, and the value of bought out items was not separately indicated. The respondent did not avail CENVAT credit on the central excise duty paid for the bought out items. They distinguished the Revenue's relied-upon judgment based on the direct supply of bought out items to the clients' site.

Upon careful consideration, the Tribunal found that the adjudicating authority's decision was correct. The respondent procured bought out items directly supplied to the clients' site, with the suppliers paying applicable central excise duty. The Tribunal referenced previous judgments to support their decision, emphasizing that the waste heat recovery boilers became immovable after assembly at the clients' site. Therefore, the reasoning adopted by the adjudicating authority was deemed correct and legal, leading to the upholding of the impugned order and the rejection of the appeal.

In conclusion, the Tribunal upheld the impugned order, stating it was correct, legal, and free from any infirmity. The appeal was rejected, and the decision was pronounced in open court on 14.03.2019.