1996 (7) TMI 280 - AT - Central Excise

Summary

Issues Involved: The judgment involves the admissibility of exemption under Notification No. 105/80 concerning charges incurred on drawing, designing, erection/commissioning charges of plant, bought out items, packing and forwarding charges, and surcharges.

Admissibility of Exemption under Notification No. 105/80:
The Collector (Appeals) determined that the value of bought out items and charges like erection charges, commissioning charges, etc., should not be considered while assessing the eligibility for the exemption under Notification No. 105/80. The Collector (Appeals) emphasized that the industrial paint shops erected on a turnkey basis are permanent in nature and the value of bought out items and erection/commissioning charges should not be included in determining the eligibility for the exemption. The Revenue appeals contested this decision, arguing that the value of bought out items should be included in the goods' value supplied. However, the Tribunal held that charges for erection and commissioning cannot be added to the value of goods cleared from the factory for fabrication at the customer's site.

Legal Precedents and Tribunal Decisions:
The Tribunal referred to various legal precedents to support its decision. It cited cases such as Quality Steel Tubes (P) Ltd. v. Collector of Central Excise and Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. v. Collector of Central Excise to establish that charges for erection and commissioning should not be added to the assessable value of goods. The Tribunal also mentioned the case of I.A.E.C. Bokers Pvt. Ltd. v. Collector of Central Excise and Collector of Central Excise v. Radiant Electronics Ltd. to emphasize that post-manufacturing expenses like installation and commissioning are not includible in the assessable value of goods.

Distinctive Factors and Decision:
The Tribunal distinguished the case of Indoprint Enterprises from the current situation, highlighting that the bought out items used in the fabrication of the plant at the site should not be included in the value for exemption purposes. Additionally, the Tribunal noted the lack of specific findings regarding packing and forwarding charges and surcharge in the show cause notice. It emphasized that charges related to handling and forwarding goods up to the factory gate should be included in the assessable value. As there was no clear breakdown provided, the Tribunal remanded the matter back to the original authority for further examination and a fresh decision.

Conclusion:
The Tribunal concluded that charges for erection and commissioning should not be added to the value of goods cleared for fabrication at the customer's site. It directed a reevaluation of packing and forwarding charges and surcharge, emphasizing the need for a detailed assessment and a decision based on the principles of natural justice. The appeals were disposed of with instructions for a fresh order in accordance with the law and additional evidence submission by the respondents.