2000 (3) TMI 108 - AT - Central Excise

Summary

Issues: Valuation of package type air conditioner and invokability of extended period of limitation for demanding duty.

Valuation of Package Type Air Conditioner:
The appeals involved the valuation of package type air conditioners and the applicability of the extended period of limitation for demanding duty. The Commissioner confirmed a demand of Rs. 9,34,173.82 and imposed a penalty of Rs. 2 lakhs, stating that the assessment should be based on assessable value as per Section 4 of the Central Excise Act. The Commissioner considered various components like cooling towers, pumps, heating systems, ducting material, plumbing material, and electrical materials as essential parts of the air conditioning system. The Commissioner held that assessable value should be calculated per the decision in Government of India v. MRF. The Commissioner also invoked the proviso to Section 11A(1) of the Central Excise Act, stating that the extended period of limitation is applicable due to non-compliance with excise documentation requirements.

Arguments and Analysis:
The learned Consultant argued that package type air conditioners are self-contained units primarily for floor mounting, with components enclosed in a steel cabinet. The Consultant emphasized that certain components like ducting, plumbing material, and electrical materials are accessories and not integral parts of the package unit. The Consultant cited legal precedents and technical specifications to support the argument that these components should not be included in the assessable value. The Consultant also contested the invokability of the extended period of limitation, stating that filing errors were unintentional and there was no intent to evade duty payment.

Decision and Rationale:
The Tribunal analyzed the components in question and concluded that while these items are necessary for the operation of the air conditioning system, they are not integral parts of the package air conditioner. Citing the Supreme Court's decision in PSI Data Systems Ltd. v. CCE, the Tribunal held that the cost of these items should not be included in the assessable value of the excisable goods. However, the Tribunal agreed with the Department's stance on the invokability of the extended period of limitation. For the first show cause notice, the failure to furnish contract details led to the department's unawareness, justifying the extended period. The Tribunal also noted that the appellants did not refute the findings regarding clearance without proper documentation, supporting the application of the extended period of limitation.

Conclusion:
The Tribunal ruled that the disputed items' costs should not be included in the assessable value of the package air conditioner. The matter was remanded to the original adjudicating authority for reassessment of duty liability, with the discretion to impose penalties if necessary. Both appeals were disposed of based on these findings, addressing the valuation issue and the invokability of the extended period of limitation comprehensively.