2009 (7) TMI 1122 - Commissioner - Central Excise

Summary

Issues Involved:

1. Inclusion of the cost of laying and jointing charges of PSC pipes in the assessable value.
2. Inclusion of the cost of rubber rings in the assessable value.
3. Imposition of penalty under Rule 25 of the Central Excise Rules.

Detailed Analysis:

1. Inclusion of the Cost of Laying and Jointing Charges of PSC Pipes in the Assessable Value:

The appellant contended that the cost of laying and jointing charges at the site should not be included in the assessable value of PSC pipes. They argued that these activities are post-manufacturing processes and do not relate to the excisability of goods. The adjudicating authority, however, included these charges in the transaction value, relying on various case laws that were not directly relevant to the issue at hand. The appellant cited several precedents, including *Indian Hume Pipes Co. Ltd. v. CCE, Calcutta* (1994) and *Gordhandas Desai Ltd. v. CCE, Vadodara-I* (2005), which established that post-manufacturing activities and costs associated with immovable properties should not be included in the assessable value. The Board's Order No. 58/1/2002-CX clarified that items assembled or erected at site, which become immovable property, are not excisable goods. The adjudicating authority failed to address these points, leading to the conclusion that the cost of laying and jointing charges should not be included in the assessable value.

2. Inclusion of the Cost of Rubber Rings in the Assessable Value:

The appellant argued that the cost of rubber rings, which are bought out items and not fitted to the product at the factory, should not be included in the assessable value. The adjudicating authority included these costs, but the appellant cited cases such as *CCE v. Multiplex Packaging* (1999) and *Fujitsu Indiatelecom v. CCE* (2003), which supported their claim that bought out items supplied directly to the site should not be included in the assessable value. The adjudicating authority did not provide reasonable grounds for including these costs, and the appellant's reliance on established case laws was not addressed. Therefore, the cost of rubber rings should not be included in the assessable value of PSC pipes.

3. Imposition of Penalty under Rule 25 of the Central Excise Rules:

The adjudicating authority imposed an equal penalty under Rule 25, despite the SCN being issued within a normal period and the issue being a periodical one already known to the department. The appellant argued that the imposition of an equal penalty is only justified in cases of fraud, collusion, misstatement, or suppression of facts, none of which were present in this case. The adjudicating authority's imposition of the penalty was found to be against the spirit of the law and the basic principles of penalty imposition. Since the appellant was not liable to include the costs in the assessable value, they were also not liable for any penalty.

Conclusion:

The appeal was allowed, setting aside the impugned order passed by the Assistant Commissioner. The cost of laying and jointing charges and the cost of rubber rings should not be included in the assessable value of PSC pipes, and the imposition of the penalty was unjustified.