1991 (4) TMI 265 - AT - Central Excise

Summary

Issues:
- Inclusion of the cost of bushes in the assessable value of spring leaves for excise duty.

Analysis:
1. The appeal arose from a dispute regarding the liability to pay duty on main springs, specifically concerning the inclusion of the cost of bushes in the value of spring leaves. The appellants manufactured motor vehicle parts, including spring leaves, with an 'eye' at their ends for fixing bushes. The appellants supplied spring leaves without bushes, as the bushes were not manufactured by them. The authorities contended that bushes were essential for the spring leaves' functionality and should be included in the assessable value for excise duty.

2. The Collector upheld the inclusion of the cost of bushes in the value of spring leaves, stating that the manufacturing cost should include all parts fitted into the final product, regardless of whether they were purchased externally. This decision was based on the premise that the bushes were integral to the manufacturing process and the functionality of the spring leaves.

3. The appellants challenged this decision by filing a revision application under Section 36(2) of the Central Excises & Salt Act, which was transferred to the Tribunal for consideration.

4. The appellants argued that the spring leaves were complete products on their own, and bushes were independently marketable goods. They contended that bushes were accessories, not essential parts, and could be provided by customers separately if needed. The appellants emphasized that the authorities did not conduct an inquiry to establish whether bushes were essential parts or accessories.

5. The appellants' representative highlighted the distinction between parts and accessories, citing previous tribunal decisions. They argued that if bushes were accessories, their cost should not be included in the assessable value of the spring leaves for excise duty purposes.

6. The Department's representative maintained that as bushes were fitted to the springs before clearance from the factory, their cost should be included in the assessable value of the final product. They argued that the appellants could not raise the accessory argument at this stage.

7. The central issue for consideration was whether the cost of bushes should be included in the assessable value of spring leaves for excise duty purposes.

8. The Tribunal noted that the authorities had assumed bushes were essential parts without conducting an inquiry or considering evidence to support this claim. The appellants consistently argued that bushes were accessories, not essential parts, and their value should not be included in the assessable value.

9. Referring to previous tribunal and court decisions, the Tribunal reiterated the distinction between parts and accessories. It emphasized that the value of an accessory should not be included in the assessable value if the product could function independently without it.

10. Consequently, the Tribunal directed the Assistant Collector to conduct an inquiry to determine whether bushes were essential parts or accessories. Based on this determination, the assessable value of spring leaves should be adjusted accordingly.

11. The appeal was allowed, and the matter was remanded to the Assistant Collector for further assessment based on the nature of bushes as essential parts or accessories.