2022 (3) TMI 1255 - AT - Central Excise

Valuation - inclusion of value of bought out items in the assessable value or not - value of bought-out item which has not come to the factory of the appellant and directly gone to the place of the customer - HELD THAT - The facts of the case are not in dispute that electric motors are directly supplied to the customers by the manufacturer thereof either on behalf of the appellant or on behalf of the customers or purchased by the customers themselves. The issue has been squarely covered by the Tribunal in the case of M/S. CHEEMA BOILERS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, CHANDIGARH 2018 (4) TMI 1157 - CESTAT CHANDIGARH where it was held that bought out items have never came to the factory of the appellant and the appellant is liable to pay duty only on the goods manufactured by them. In that circumstance, for the bought items, the appellant is not required to pay duty. In these circumstances, it is held that the value of bought out item which has gone directly to the customer place is not includable in the assessable value of PD Pumps - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Inclusion of the value of bought out items in the assessable value of the final product.

Analysis:
The appellant, engaged in manufacturing power-driven pumps (PD Pumps), appealed against an order confirming a demand that included the value of bought out items in the assessable value of their final product. The appellant had various modes of transactions for selling PD Pumps and bought out items, including those with and without electric motors. The Revenue contended that the value of the electric motor should be included in the assessable value of the PD Pump, even if the motor never came to the factory of the appellant. A show cause notice was issued, leading to the confirmation of duty demand, interest, and penalty. The appellant argued that based on previous tribunal decisions, the value of bought out items not coming to the factory should not be included in the assessable value.

The Tribunal examined the facts and previous decisions, notably the case of Cheema Boilers Ltd., where it was held that bought out items not entering the factory need not be included in the assessable value. The Tribunal reiterated that the value of bought out items directly supplied to the customer's place should not be part of the assessable value of PD Pumps. As the bought out items did not come to the factory and were directly sent to customers, the Tribunal found no merit in the impugned order. Consequently, the appeal was allowed, and relief granted to the appellant.

In conclusion, the Tribunal held that the value of bought out items not entering the factory of the appellant should not be included in the assessable value of the final product. The decision was based on established principles from previous cases, providing relief to the appellant against the duty demand imposed by the Revenue.