1996 (11) TMI 244 - AT - Central Excise

Summary

Issues:
1. Confirmation of demand of duty under Section 11A of the Central Excise Act.
2. Direction to pay interest under Section 11AA of the Central Excise Act.
3. Imposition of penalty under Rule 173Q of the Central Excise Rules.
4. Inclusion of erection and commissioning charges in the assessable value.

Confirmation of Demand of Duty:
The appeal was filed against the order passed by the Commissioner of Central Excise, Mumbai-III, confirming the demand of duty amounting to Rs. 1,48,521/- under proviso to Section 11A of the Central Excise Act. The Commissioner also directed the appellants to pay interest at 20% under Section 11AA of the Act and imposed a penalty of Rs. 50,000/- under Rule 173Q of the Central Excise Rules. The appellant contested the inclusion of erection and commissioning charges in the assessable value, arguing that such charges should not form part of the assessable value based on previous Tribunal decisions.

Inclusion of Erection and Commissioning Charges:
The appellant contended that the erection and commissioning charges should not be considered part of the assessable value, relying on Tribunal decisions in similar cases. The Department argued that in this case, the charges were included in the assessable value as part of a consolidated contract for the supply of machines. The Department relied on a specific Tribunal decision and the observations of the Commissioner, highlighting that the normal price of the contracted goods would include erection, commissioning, and service charges. The Tribunal noted that post-manufacturing expenses like erection and commissioning charges should not be included in the assessable value, referencing previous Tribunal decisions and cautioning against diverting the true price of goods to service charges.

Decision and Analysis:
The Tribunal found that the caution given in previous cases applied to ensure no attempt at diverting the true price of goods to service charges. Despite the Department's argument and the contract's printed form indicating exclusion of erection charges, the Tribunal observed that the typed material in the contract included specific charges for erection. The Tribunal rejected the Department's contention, noting that invoices showed commissioning charges and the appellant's actions supported the inclusion of such charges in the assessable value. The Tribunal concluded that the previous Tribunal decisions applied to the case, rejecting the Department's arguments and allowing the appeal while setting aside the impugned order.