1996 (9) TMI 225 - AT - Central Excise

Summary

Issues:
1. Inclusion of cost of electric motors in determining the assessable value of industrial fans.
2. Time-barred demands under Rule 10 of the Central Excise Rules.

Analysis:
1. The appeals involved a dispute regarding the inclusion of the cost of electric motors in determining the assessable value of industrial fans manufactured by the appellants. The appellants argued that since the electric motors were bought out items and invoiced separately, their cost should not be considered in the assessable value calculation. However, it was contended that electric fans were designed to operate with electric motors, making the cost of motors an essential part of the final product. The Tribunal referred to the Supreme Court's decision in Kirloskar Brothers Ltd. v. Union of India, emphasizing that the cost of bought-out items, even if components, must be included in the assessable value. The Tribunal held that the appellants had no case on merit based on established legal principles and previous court decisions.

2. The issue of time-barred demands under Rule 10 of the Central Excise Rules was also considered. The demands were issued under Rule 10, which had a normal limitation period of six months. The appellants argued that the show cause notices did not allege any suppression or fraud, and therefore, demands beyond the normal limitation period were not justified. The Tribunal agreed that the demands issued beyond the normal limitation period lacked justification, especially since there were no allegations of fraud or suppression. It was noted that one show cause notice was fully time-barred, while another was partly within time and partly time-barred. Ultimately, the Tribunal allowed the appeal on the question of limitation for one case and partly allowed it for another, while rejecting the third appeal.

In conclusion, the Tribunal rejected all three appeals on merit regarding the inclusion of the cost of electric motors in the assessable value of industrial fans. However, the Tribunal allowed one appeal and partly allowed another concerning time-barred demands under Rule 10 of the Central Excise Rules.