1998 (2) TMI 244 - AT - Central Excise

Summary

Issues:
1. Appeal against Order-in-Appeal dated 31-8-1990 allowing two appeals filed by the assessee.
2. Inclusion of testing and erection charges in the assessable value of the excisable product.
3. Demand for duty on the element of testing and erection charges.
4. Interpretation of fitment charges or erection charges in relation to the cooling tower.
5. Testing charges related to the supplied items and their inclusion in the value of Fan Blades.

Analysis:
The appeal was directed against the Order-in-Appeal allowing two appeals filed by the assessee against Orders passed by the Assistant Collector. The Assistant Collector had approved four price lists and confirmed a demand for a specific period based on the approval Order. The respondent had contracts for supplying FRP Fan Blades and Hub-Assembly for cooling towers, excluding testing and erection charges. The Department proposed including these charges in the assessable value, leading to a demand for duty. The Assistant Collector confirmed the proposals, but the Orders were set aside by the Collector (Appeals).

Regarding the fitment charges or erection charges, it was established that the cooling tower is immovable property, and the respondent supplied Fan Blades and purchased Hub-Assembly for fitting in the tower. As the respondent did not manufacture the cooling tower or the Hub-Assemblies, the question of paying duty on fitment or erection charges did not arise. The charges were for fitting the items inside the cooling tower, which was immovable property, and thus duty payment was not applicable.

The issue of testing charges was also addressed, with the Collector of Central Excise not providing crucial documents like the show cause notice or contract. The testing charges were related to demonstrating the usefulness of the Blades to buyers and were conducted at the buyers' premises. The testing was done to showcase the savings in electricity costs by using the Blades. The testing charges were not for performance testing before or after removal but to satisfy buyers about specific aspects. As the testing was done at the buyer's option and not part of the manufacturing process, these charges could not be included in the value of the Fan Blades.

Ultimately, the Tribunal found no reason to interfere with the Orders and dismissed the appeal, upholding the decision of the Collector (Appeals) in setting aside the proposals to include testing and erection charges in the assessable value of the excisable product.