1981 (7) TMI 70 - CGOVT - Central Excise

Summary

Issues involved: Assessment of duty on elevators and escalators under Tariff Item 68 of Central Excise Tariff, consideration of elevators and escalators as goods, applicability of Notification No. 85/79 for exemption, exclusion of post-manufacturing expenses in determining assessable value.

Assessment of duty on elevators and escalators: The petitioners, engaged in the business of erection and installation of elevators and escalators, challenged the Asstt. Collector's order levying duty on the manufactured elevators and escalators under Tariff Item 68. The Appellate Collector differentiated between assessing the lifts as goods and assessing the component parts used in manufacturing the lifts. As the petitioners failed to produce invoices for the component parts, the Appellate Collector determined the assessable value by considering the composite value of the entire product, excluding charges unrelated to lift manufacture.

Consideration of elevators and escalators as goods: The petitioners argued that elevators and escalators, upon complete erection and installation, become part of immovable property and should not be classified as goods. Referring to a High Court judgment, they contended that the contracts for erection and installation were indivisible works contracts, not contracts for sale of goods. The Government agreed with this contention, stating that once installed in buildings, elevators and escalators are affixed and not intended to be moved, thus not meeting the definition of goods under Tariff Item 68.

Applicability of Notification No. 85/79 for exemption: The petitioners claimed eligibility for exemption under Notification No. 85/79, which exempts goods falling under Tariff Item 68 and manufactured outside a factory. However, the Government's decision to not classify elevators and escalators as goods rendered this contention moot.

Exclusion of post-manufacturing expenses in determining assessable value: In the event that elevators and escalators were considered goods, the petitioners sought the exclusion of post-manufacturing expenses while determining the assessable value. This argument was not addressed by the Government due to the decision regarding the classification of elevators and escalators as immovable property.

The Government concluded that elevators and escalators, once erected and installed, become part of immovable property and are not to be considered goods under Tariff Item 68. Therefore, no duty is chargeable when component parts are assembled on-site to install the elevators and escalators. The revision application was disposed of based on this finding, without delving into the other contentions raised by the petitioners.