1999 (7) TMI 395 - AT - Central Excise

Summary

Issues:
1. Duty liability on mechanical handling equipment installed at customer's site.
2. Whether charges for engineering and design activities are excisable and liable to duty.
3. Duty payable on goods manufactured by the appellant and used for setting up the equipment.
4. Inclusion of charges towards design and engineering in the assessable value.

Analysis:
The judgment deals with the duty liability on mechanical handling equipment installed at the customer's site. The appellant manufactures such equipment using goods from other manufacturers. The Asstt. Collector initially proposed to charge duty on the entire cost of the equipment. However, it was contended that charges for engineering activities related to the equipment, being immovable property, should not be excisable. The departmental representative argued otherwise, claiming these charges were liable to duty.

Regarding the charges for engineering and design activities, the Asst. Collector's order lacked reasoning for dropping the demand. The appellant argued that since the equipment itself is not excisable, charges for activities related to its installation should also not be excisable. It was emphasized that duty had already been paid on goods manufactured and cleared by the appellant for setting up the equipment.

The judgment clarified that duty would be payable on specially fabricated items used for the equipment, based on the cost of manufacture plus profit earned by the appellant. The charges for design and engineering were deemed includable in the assessable value. The appellant agreed with this decision. However, it was determined that the value of these charges needed to be calculated based on the contract and relevant data, to ascertain the duty payable on them.

In conclusion, the appeal was allowed, and the impugned order was set aside. The Asst. Commissioner was tasked with determining the duty payable by the appellant, considering the charges for design and engineering activities, and communicating the same to the appellant within a specified timeframe.