1997 (5) TMI 240 - AT - Central Excise

Summary

Issues:
1. Whether the value of an optional accessory, specifically a drifter, should be included in the assessable value of a drill for the purpose of excise duty calculation.
2. Whether the drifter is an integral part of the drill or merely an optional accessory.
3. Whether the notice issued to the appellant was barred by limitation.

Analysis:

Issue 1: Inclusion of Optional Accessory Value
The appellant contended that the drifter, being an optional accessory, should not have its value included in the assessable value of the drill for excise duty calculation. The Department argued that the drifter is an integral part of the drill. The Tribunal examined the function of the Crawlair Drills, noting that customers could request either a drill with a drifter or a drill with a rotary head. The literature provided by the appellant indicated the compatibility of the drill with both types of drilling equipment. The Tribunal concluded that the drifter must be considered a part of the drill in trade parlance, regardless of the specific drilling equipment used. Therefore, the demand for excise duty was upheld.

Issue 2: Integral Part or Optional Accessory
The appellant argued that the drill and drifter are functionally separate entities, with the drill's purpose being to drill holes and the drifter enabling the drilling process. While acknowledging this distinction, the Tribunal maintained that the drifter should be viewed as an integral part of the drill based on the trade practices and the equipment's design. The appellant did not provide evidence of selling drills without either a drifter or a rotary head, reinforcing the Tribunal's decision that the drifter is integral to the drill.

Issue 3: Limitation of Notice
The appellant raised a plea that the notice issued was barred by limitation. However, this contention was overruled by the adjudicating authority, and the penalty was imposed. The Tribunal did not find merit in this argument and upheld the decision, ultimately dismissing the appeal.

In conclusion, the Tribunal upheld the demand for excise duty, considering the drifter as an integral part of the drill based on trade practices and equipment functionality. The appellant's arguments regarding the optional nature of the drifter and the limitation of the notice were not accepted, leading to the dismissal of the appeal.