2003 (5) TMI 157 - AT - Central Excise

Summary

Issues involved: Challenge against order confirming demand under two show cause notices and imposition of penalty u/r 173Q of Central Excise Rules, 1944. Issue of whether installation and commissioning charges should be included in the value of goods manufactured and cleared.

Issue 1 - Challenge against order and penalty: The appeal contested the order confirming a demand of Rs. 28,00,000/- and Rs. 65,77,852/- under two show cause notices, with penalties imposed under Rule 173Q of Central Excise Rules, 1944. The Commissioner upheld the demand and penalties, citing non-payment within stipulated period under Section 11AA.

Issue 2 - Inclusion of installation charges in assessable value: The main issue raised was whether installation and commissioning charges should be added to the value of chillers and air handling units manufactured and cleared by the appellant. The Commissioner rejected the appellant's contention, stating that the entire amount received for supply should be treated as assessable value, based on a purchase order and clearance valuation discrepancy.

Appellant's argument: The appellant argued that the installation charges should not be included in the assessable value, as the products were marketable as complete units. They highlighted that a significant portion of transactions were for supply only, with separate contractors engaged for installation work. The appellant emphasized that charges for installation and commissioning should not inflate the assessable value of the goods.

Decision: The Tribunal sided with the appellant, stating that charges for installation and commissioning should not be added to the assessable value of goods cleared from the factory. Citing legal precedents and a circular from the Board of Revenue, the Tribunal clarified that if charges are incurred to bring into existence excisable goods, they should be included in the assessable value; otherwise, they should not. The Tribunal set aside the order and allowed the appeal, emphasizing that installation charges should not be part of the assessable value.