1992 (2) TMI 233 - AT - Central Excise

Summary

Issues:
Whether the value of 'O' rings is includible in the assessable value of Asbestos Cement Pipes and Tubes.

Analysis:
The dispute in this case revolves around the inclusion of the value of 'O' rings in the assessable value of Asbestos Cement Pipes and Tubes supplied by the appellants. The respondents manufacture Asbestos Cement Pipes, Tubes, and Couplings, which include 'O' rings as part of the couplings. The issue arose when the respondents claimed a deduction for the value of 'O' rings from the contract value of couplings, arguing that these rings were bought out items and not integral parts of the couplings. The Assistant Collector disallowed the deduction, but on appeal, the Collector held that 'O' rings were not essential parts of the couplings, leading to the current appeal by the department.

The Collector based his decision on the description of Tariff Item 23-C, which includes Asbestos Cement products like pipes and tubes but does not specifically mention 'O' rings as integral parts of couplings. He noted that alternative sealing items could be used in place of 'O' rings, indicating that these rings were not indispensable components of the couplings. However, the department argued that 'O' rings were supplied along with the couplings to ensure correct specifications and were essential for leak-proof joints. They contended that since 'O' rings were to be fitted in the couplings, their value should be included in the assessable value of the finished product.

On the other hand, the respondents asserted that 'O' rings were optional accessories provided to customers upon request and were not essential parts of the couplings. They highlighted that customers could use alternative sealing solutions and that 'O' rings were not fitted in the couplings at the time of removal. Drawing on precedents, they argued that optional accessories should not be included in the assessable value of the main product. The Tribunal, considering the arguments and precedents cited, concluded that the value of 'O' rings, being optional accessories and bought out items, should not be included in the assessable value of the pipes and asbestos couplings.

In light of the above analysis, the Tribunal rejected the appeal, affirming that the value of 'O' rings is not includible in the assessable value of the pipes and asbestos couplings.