1998 (5) TMI 202 - AT - Central Excise

Summary

Issues Involved:
1. Delay in filing the supplementary appeal.
2. Classification and excisability of textile ring spinning frames and ring doubling frames.
3. Inclusion of the value of bought-out components in the assessable value.
4. Applicability of the larger period for demand under Section 11A of the Central Excise Act, 1944.
5. Inclusion of erection and commissioning charges in the assessable value.
6. Whether the final product constitutes immovable property.

Detailed Analysis:

1. Delay in Filing the Supplementary Appeal:
The Tribunal condoned the delay in filing the supplementary appeal, in line with its established practice, and took up both the main and supplementary appeals together for decision.

2. Classification and Excisability of Textile Ring Spinning Frames and Ring Doubling Frames:
The appellants are manufacturers of textile ring spinning frames and ring doubling frames, classifiable under heading 84.45 of the CET. The main contention revolves around whether these frames, supplied in knocked-down condition and assembled at the customer's site, should include the value of bought-out components in their assessable value. The department argued that the frames, as advertised and sold, included all components and should be taxed as a complete product. The appellants contended that only the bare frames were manufactured by them, and the bought-out components were separately invoiced and already duty-paid by the original manufacturers.

3. Inclusion of the Value of Bought-Out Components in the Assessable Value:
The Collector held that the entire machine, including bought-out components, should be taxed as the appellants advertised and sold the complete machine. The appellants argued that the bought-out components were independent items and not part of the manufactured frames. The Tribunal noted that the Supreme Court's judgments in cases like Mittal Engineering and Quality Steel Tubes, which held that installation and commissioning charges are not to be included in the assessable value, were not considered in the earlier Tribunal decision. The Tribunal emphasized that the spindle frames and bought-out components should be assessed separately.

4. Applicability of the Larger Period for Demand under Section 11A of the Central Excise Act, 1944:
The Collector invoked the larger period for demand, citing suppression of facts by the appellants. The appellants argued that there was no suppression as they had paid duty on the frames and the bought-out components were already duty-paid. The Tribunal directed the Collector to re-examine this aspect, considering whether there was a deliberate intent to evade duty.

5. Inclusion of Erection and Commissioning Charges in the Assessable Value:
The appellants cited the Supreme Court's judgment in the case of M/s. Thermax Limited, which held that erection and commissioning charges should not be included in the assessable value. The Tribunal noted that this aspect was not adequately addressed in the earlier decision and required re-examination by the Collector.

6. Whether the Final Product Constitutes Immovable Property:
The appellants argued that the final product, after assembly at the customer's site, constituted immovable property and thus was not excisable. The Tribunal referenced the Supreme Court's judgment in Mittal Engineering, which distinguished between goods and immovable property. The Tribunal directed the Collector to re-evaluate whether the frames, after assembly, became immovable property and thus non-excisable.

Conclusion:
The Tribunal remanded the case for de novo consideration by the Collector, directing a thorough re-examination of the issues in light of the Supreme Court's judgments and the appellants' contentions. The Collector is to determine the excisability of the frames as independent goods, the inclusion of bought-out components and erection charges in the assessable value, and the applicability of the larger period for demand. The appeal was allowed by remand.