2017 (12) TMI 1176 - AT - Central Excise

Valuation - towers used for transmission of signals - inclusion of items consumed for the purpose of erection of tower. - Held that - the Hon ble Supreme Court in the case of PCC Pole Factory vs CCE, 2003 (10) TMI 53 - SUPREME COURT OF INDIA , allowed the claim of the assessee-Appellants where PCC Poles were used for transmission of the electric energy. There was no further activity of manufacture and no business was carried out by the Electricity Board. Identically, in the instant case, the towers were used by the assessee-Appellants for only transmission of the signals without carrying out any further business activity - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
- Applicability of valuation rules for products used in the erection of towers
- Interpretation of Central Excise Valuation Rules 2000
- Comparison with a similar case involving PCC Poles
- Relief granted by the Commissioner in a subsequent period

Analysis:
The appeals were filed against orders passed by the Commissioner of Central Excise, Raipur-II, regarding the valuation of products manufactured by the assessee-Appellants, which were used in the erection of towers for providing communication services. The dispute centered around the applicability of valuation rules as the products were not used in the production or manufacture of the final product but consumed for tower erection. The Department sought to apply the residuary clause under Rule 11 of the Central Excise Valuation Rules 2000, which was challenged by the assessee-Appellants.

Upon hearing both parties and examining the relevant material, it was noted that Rule 8 of the Central Excise Valuation Rules 2000 specifies the valuation method when excisable goods are not sold but used for consumption in the production of other articles. Rule 11 states that if the value cannot be determined under previous rules, it should be determined using reasonable means consistent with the principles of the rules and the Central Excise Act. Since the goods were not consumed in the production of other articles, referring to the cost of production or manufacture was deemed irrelevant.

In a similar case involving PCC Poles used for transmission of electric energy, the Hon’ble Supreme Court had allowed the claim of the assessee-Appellants where no further manufacturing activity or business was carried out. Drawing a parallel, in the present case, the towers were solely used for signal transmission without additional business activities. Consequently, considering the totality of facts and circumstances, the Tribunal found no reason to uphold the impugned orders and set them aside, thereby allowing the appeals filed by the assessee-Appellants.

Moreover, it was highlighted that in a subsequent period, the Commissioner had granted relief to the assessee-Appellants in identical circumstances, further supporting the decision to set aside the impugned orders. The judgment was dictated and pronounced in the open court, concluding the matter in favor of the appellants.