1999 (5) TMI 100 - AT - Central Excise

Summary

Issues:
1. Whether the cost of trailers should be included in the assessable value of generating sets sold to the defence forces.

Analysis:
The appellant, a manufacturer of electric generating sets, sold part of its production to the defence forces, either as standalone generating sets or mounted on trailers. The appellant included the cost of trailers it purchased in the assessable value of the mounted generating sets but did not include the value of trailers provided by the defence forces. The Collector (Appeals) upheld the inclusion of the cost of trailers in the assessable value.

The appellant argued that most generating sets were sold without being mounted on trailers, and the mounting was at the option of the defence forces, making trailers accessories rather than essential components. The appellant relied on a Supreme Court judgment to support its position.

The Departmental Representative contended that the trailers constituted special purpose motor vehicles and should be included in the value of the generating sets. He argued that the Supreme Court's judgment was distinguishable, and trailers could not be considered accessories.

The Tribunal noted that electrical generating sets were classified under Heading 85.02, and the mounting on trailers did not make them a special category that required inclusion of trailer costs. The trailers did not enhance the functioning of the generating sets and were primarily for transportation purposes. The Tribunal rejected the Department's attempt to change the classification and found it unnecessary to pursue the argument further.

Referring to relevant case law, the Tribunal emphasized that accessories fitted at the buyer's request should not be included in the assessable value. Since the fitment of generating sets on trailers was at the defence forces' request, the cost of trailers should not be part of the assessable value.

In conclusion, the Tribunal allowed the appeals, set aside the impugned order, and directed for consequential relief, if permissible by law, stating that the cost of trailers should not be included in the assessable value of the generating sets.