1987 (2) TMI 250 - AT - Central Excise

Summary

Issues:
- Inclusion of charges for erection, installation, and commissioning in the assessable value of cranes.
- Whether cranes became immovable property after installation.
- Applicability of Supreme Court judgments on exclusion of post-removal expenses from assessable value.

Analysis:

The judgment by the Appellate Tribunal CEGAT, New Delhi involved five appeals concerning common issues of facts and law related to the assessable value of "Electric Overhead Travelling Cranes." The crux of the matter was the inclusion of charges for erection, installation, and commissioning in the assessable value of the cranes, along with the determination of whether the cranes became immovable property after installation.

Regarding the charges for erection, installation, and commissioning, the department defended the impugned order, arguing that the cranes were fully manufactured goods only after being erected at the site. The appellants, on the other hand, contended that the cranes were tailor-made and could not function in any other location due to the nature of the installation work involved.

The Tribunal disagreed with the view taken by the Collector (Appeals) and the department, emphasizing that the Supreme Court judgment in the case of Bombay Tyres International did not address the inclusion of erection, installation, and commissioning charges in the assessable value. The Tribunal highlighted that the cranes, once installed, became immovable property, akin to other articles permanently fixed to the ground.

Furthermore, the Tribunal referenced a recent Supreme Court judgment in the case of Madras Rubber Factory Limited, which stated that costs incurred after the removal of goods from the factory cannot be included in the assessable value. This supported the conclusion that the cranes were fully manufactured goods even before installation, and the optional nature of the installation work reinforced this stance.

The Tribunal also addressed the department's argument that the cranes could be dismantled and moved elsewhere. However, it reasoned that even if dismantled, the cranes would revert to their original state at the time of removal from the factory, which had already been assessed to duty.

In light of the above discussions and legal principles, the Tribunal set aside the impugned orders-in-appeal and allowed all five appeals, providing consequential relief to the appellants.