1994 (5) TMI 85 - AT - Central Excise

Summary

Issues Involved:
1. Inclusion of the value of bought-out accessories in the assessable value of wooden fishing boats.
2. Eligibility for exemption under Notification No. 102/80-CE as "ocean going vessels."
3. Allegation of suppression of facts and limitation period for issuing show cause notices.

Detailed Analysis:

1. Inclusion of the Value of Bought-Out Accessories:

The primary issue revolves around whether the value of bought-out accessories (such as wire ropes, fishing gears, monofilament ropes, wrenches, shovels, etc.) should be included in the assessable value of wooden fishing boats manufactured by the appellant for the purpose of levying Central Excise duty under Tariff Item No. 68 of the erstwhile First Schedule to the Central Excises and Salt Act, 1944.

The Collector of Central Excise (Appeals) held that since the accessories were essential parts of the boats, their value must be included in determining the assessable value of the boats. However, the appellants contended that these accessories were not manufactured by them, were bought out separately, and were not fitted into the boats at the time of their clearance from the factory. They argued that the accessories were supplied as per customer requirements and charged separately, and thus their value should not be included in the assessable value.

The Tribunal considered various precedents, such as Diamond Clock Manufacturing Company Limited v. C.C.E., Pune, and Collector of Central Excise v. Kalinga Chemicals Industries, which supported the appellants' contention that the value of bought-out items, not fitted into the manufactured product, should not be included in the assessable value.

The Tribunal concluded that the essentiality of accessories is not relevant for assessing goods cleared without such accessories under Item No. 68. Since the accessories were not manufactured by the assessee and were supplied separately, their value should not be included in the assessable value of the boats.

2. Eligibility for Exemption as "Ocean Going Vessels":

The appellants claimed exemption under Notification No. 102/80-CE, arguing that the wooden fishing boats they manufactured were "ocean going vessels." The show cause notices described the goods as "wooden fishing boats," and certificates from the Registrar of Sailing Vessel Veraval referred to them as "sailing vessels."

The Tribunal referred to the definition of "vessel" in Section 3(63) of the General Clauses Act and various notifications and clarifications, including Customs Notification No. 211/83-Cus., which included fishing vessels under the term "ocean going vessels." The Tribunal also cited the decision of the Judicial Commissioner, Goa, and the Supreme Court's ruling in Panduronga Timblo Industries, which supported a broad interpretation of "vessel" to include boats used in navigation beyond inland waters.

Based on these references, the Tribunal concluded that the wooden fishing boats manufactured by the appellants qualified as "ocean going vessels" and were eligible for the exemption under Notification No. 102/80-CE.

3. Allegation of Suppression of Facts and Limitation Period:

The appellants argued that there was no suppression of facts as alleged in the show cause notices. They maintained that the accessories were invoiced separately and nothing was hidden from the department. The Tribunal noted that the show cause notices did not allege suppression explicitly.

The Tribunal referred to various decisions, including Piyush Kumar Prabhu Das Mehta v. Collector of Central Excise and Mac Laboratories (P) Limited v. Collector, Central Excise, which emphasized the need for clear allegations of suppression for invoking extended limitation periods.

Given the lack of explicit allegations of suppression in the show cause notices, the Tribunal found the appellants' plea on the limitation period valid, further supporting the appeals' acceptance.

Conclusion:

The Tribunal allowed the appeals, concluding that the value of bought-out accessories should not be included in the assessable value of the wooden fishing boats, and the boats were eligible for exemption as "ocean going vessels." The Tribunal did not find it necessary to discuss other points raised by the appellants, as the main issues were resolved in their favor.