2004 (10) TMI 189 - AT - Central Excise

Summary

Issues Involved:
1. Inclusion of erection and commissioning charges in assessable value.
2. Inclusion of bought-out items in assessable value.
3. Applicability of larger period for recovery of duty.
4. Imposition of penalties and interest.

Detailed Analysis:

1. Inclusion of Erection and Commissioning Charges in Assessable Value:
The appellants collected erection and commissioning charges through debit notes without paying duty on them. The Tribunal found that the erection and commissioning of Laboratory Furniture and Fume Hoods at the buyer's site resulted in immovable goods, which are non-transportable and not marketable in their erected form. Therefore, these charges should not be included in the assessable value under Section 4 of the Central Excise Act, 1944. The Tribunal relied on established jurisprudence that erection and commissioning charges do not bring new excisable goods into existence.

2. Inclusion of Bought-Out Items in Assessable Value:
The appellants supplied various bought-out items directly to the buyer's site and did not include their value in the assessable value. The Tribunal noted that bought-out items like Granite Tops, which are accessories to the Laboratory Furniture, cannot have their value added to the excisable goods. The Tribunal referenced decisions in MIL India Ltd. v. C.C.E., Noida and Cimmco Birla Ltd. v. C.C.E., Jaipur, which held that the value of accessories and bought-out items directly supplied to the site should not be included in the assessable value. The Tribunal also found that the bought-out items become part of an immovable structure and are not marketable in their assembled form.

3. Applicability of Larger Period for Recovery of Duty:
The Show Cause Notice invoked a larger period for recovery of duty under Section 11A(1) of the Central Excise Act, alleging suppression of facts. The Tribunal found no evidence of suppression, willful misstatement, or fraud by the appellants. The appellants had been registered with the Central Excise Authorities for over ten years, filed required declarations, and availed Modvat credit. The Tribunal concluded that the demands were barred by limitation due to the absence of corroborative evidence to justify the invocation of the larger period.

4. Imposition of Penalties and Interest:
The Tribunal found no justification for imposing penalties under Section 11AC of the Central Excise Act or charging interest under Section 11AB. The maintenance of different series of invoices and debit notes by the appellants was for accounting convenience and exhibited their bona fides. The Tribunal referenced cases like Electronics Corpn. of India Ltd. v. C.C.E., Hyderabad-III and Suz-Dent (India) Pvt. Ltd. v. C.C.E., Ahmedabad-III, which held that re-assembly of goods at the buyer's site does not attract further excise duty. Consequently, the Tribunal set aside the order demanding duty, penalties, and interest.

Conclusion:
The Tribunal concluded that the erection and commissioning charges, as well as the value of bought-out items, should not be included in the assessable value. The demands for duty were barred by limitation, and there was no basis for imposing penalties or interest. The appeals were allowed, and the order was set aside.