2000 (5) TMI 112 - AT - Central Excise

Summary

Issues:
1. Whether Fan Guards manufactured by the appellants and fitted with monogram supplied by M/s. Usha Fans are entitled to the benefit of Notification No. 175/86-C.E., as amended.
2. Inclusion of cost of free supply materials by the buyers in the assessable value of the fan guards.
3. Inclusion of packing charges in the assessable value of the said fan guards.

Analysis:

Issue 1:
The appellants contended that they are small scale industrial unit manufacturing fan guards for M/s. Usha Fans under purchase orders. The central disc with the Usha monogram supplied by M/s. Usha Fans is used in the manufacturing process. The benefit of Notification was denied on the grounds that the guards were manufactured with the brand name of Usha, not eligible for the small-scale exemption. The Tribunal noted that the appellants were not affixing the brand name on the central disc, and the fan guards were not sold in the market under the Usha brand but used in the manufacture of fans. Referring to previous cases, the Tribunal held that the benefit of the Notification cannot be denied based on the brand name used in the manufacturing process.

Issue 2:
The appellants admitted that the cost of free supply items by buyers was correctly added to the assessable value of the final product by the adjudicating authority, and they did not contest this point in their appeal.

Issue 3:
Regarding the inclusion of packing charges in the assessable value, the adjudicating authority considered the packing as primary packing for transportation to outside parties. The appellants clarified that such packing was only done for outstation clearance to safeguard the product during transportation. The Tribunal, after considering submissions and reasoning, held that packing charges for transportation, whether primary or secondary, should not be included in the assessable value unless it is the packing in which goods are normally sold at the factory gate. As the fan guards were removed to the buyers' Calcutta Factory without such packing, the Tribunal concluded that the packing charges should not be included in the assessable value. Consequently, the appeal was allowed on this ground.

This comprehensive analysis of the judgment addresses all three issues involved in the appeal before the Appellate Tribunal CEGAT, CALCUTTA.