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TMI Blog1996 (10) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... howing only the value of copiers and not showing the value of consumables (such as selenium drum, developer, toner and cleaning cassette) or stand and paying duty only on the value of copiers as shown in the price lists. The appellant was not paying duty on the aforesaid consumables or stand which were being supplied alongwith copiers to all customers. Inspection and investigation revealed further facts. Consumables were being supplied to all buyers of copier and the value of consumables was being shown separately in the invoices for copiers till 18-12-1983. Cost of copier and consumables was being shown in common bills in regard to first clearances and separate bills were being issued after the crossing of exemption limit under the exemption notifications concerned. Suitable consumables were being imported on the strength of licence, the same being described as components/raw materials in Bills of Entry and suppliers invoices. The agreements between the appellant and the main customers required the consumables also to be supplied alongwith copiers. Substitute consumables were not suitable for the copiers manufactured by the appellant. M/s. Devilog Enterprises is a partnership f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... berate misdeclaration of value in order to evade duty. He supported the impugned order. 4. Learned Counsel for appellant has relied on certain decisions to contend that the value of consumables and stand are not to be reckoned for the purpose of arriving at the assessable value of copiers. The earliest of the decisions is that of the High Court of Bombay in Kosan Metal Products Pvt. Ltd. v. Union of India Others - 1981 (8) E.L.T. 725 (Bom.). The petitioner in that case was manufacturing and selling gas cylinders without filling valves and regulators. It was held that valves are distinct from cylinders and are not parts of the cylinders and this was recognised by International trade and trade circles in this country and the revisional authority was in error in holding that value of valves is to be included in the assessable value of gas cylinders merely because valves are essential for the functioning of gas cylinders. This decision rested on the factual finding that valves were not part of gas cylinder. In Webel Telecommunications (I) Ltd. v. Collector of Central Excise - 1987 (32) E.L.T. 453 (Tribunal), appellant was manufacturing walkie talkie sets and spare parts thereof. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor fitting and hence their value was held not to be included in the assessable value of insulators. 5. In Jyoti Ltd. v. Union of India and Another - 1979 (4) E.L.T. (J 546), the High Court of Gujarat observed that the test is how the matter will be understood by those who are accustomed to deal with the goods (in this case power-driven pumps) in their ordinary avocations. Pump has three main parts, namely, the part which guides liquid to the impeller, impeller which slaps the liquid and the guide vanes which straightens the flow. In a vertical pump, these are called suction case, impeller and bowl, compendiously called `bowl assembly . In horizontal pumps, the first and third parts are combined and called casing. Bowl assembly is a pump by itself and can be installed and worked as a pump without any accompaniments. The function of a pump is to shift liquid from one point to another or from a lower point to a higher point. Power drives the bowl assembly and not the column assembly which remains stationary or the head assembly which merely keeps column assembly and bowl assembly suspended below the discharge head assembly. Where a pump goes out of order, what is replaced is the bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tems in the case were stated to be accessories supplied at the option of the customers. Paragraph 6 also clearly states that the appellant pleaded that it was only an option and the activity was undertaken by the manufacturer whenever the customer specifically asked for it and not otherwise and this aspect was not looked into by the adjudicating authority. On this ground the case was remanded for consideration of the issue. Sentences in Paragraph 6 have to be read together in order to find out the correct proposition of law. 6. Reference is made to the decision of the High Court of Calcutta in H.C.L. Ltd v. Union of India - 1992 (59) E.L.T. 507. The head note refers to selenium drum as consumable part but the judgment does not contain any such statement. Actually no dispute was raised before High Court as to whether selenium drum is or is not a part of copier. Obviously the head note has not been prepared with any degree of care. In Collector of Central Excise v. Lawkim Pvt. Ltd. - 1987 (31) E.L.T. 700 the Tribunal observed that it would not be permissible for a manufacturer to market a particular article and seek exclusion from its assessable value, the value of certain `parts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contention that drums had to be supplied separately without being fitted in machines as normal packing used would affect the lifespan of drums, that drums were supplied either with machines or separately alongwith machines and duty had been paid on drums separately and held that value of drums could not be added to the assessable value of machines. He held the other items to be consumables. In further appeal by Collector of Central Excise, the Tribunal in deciding the various disputes raised, upheld the conclusion of Collector (Appeals) observing that machines were supplied without drums. Various facts relating to the dispute and the earlier decisions of the Tribunal were not adverted to. It appears Collector of Central Excise filed Civil Appeals 1756 and 1766 of 1990 before the Supreme Court and they were dismissed in limine without indicating any reasons. The Tribunal did not also advert to the factual finding of lower authorities that drum was an essential part of machine and without drum, machine will not be photocopier machine. The order does not show that drums were supplied to all buyers of machines. It would appear that assessee manufactured and cleared incomplete machine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hine. This is different from genuine cases of manufacture and clearance of incomplete machines where the manufacturer has no obligation to and does not arrange supplies of the particular part. The value of parts without which the machine cannot function as such has to be included in the assessable value of the machine. There may be accessories which are not necessary for the functioning of the machine but which enable the machine to provide scope for additional functions and which are not compulsorily sold to all buyers of the machine and are sold only at the option of the buyers. Such parts cannot be regarded as integral part of the machine and their value cannot be added to the assessable value of the machine. Even in such a case, the manufacturer may be clearing two kinds of machines, one not fitted with optional accessories and the other fitted with such accessories and the second kind of machine is supplied to all customers who want the same. In the case of the second kind of machine, the machine as a whole has to be valued. 9. We will examine the facts of the case in the light of the above principles. Toner and Developer Toner is a powder which has to be kept in the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces. There is no dispute that as many drums were supplied as the number of copiers supplied. Separate supply without actual fitting was only a device adopted by the parties to see if duty burden could be reduced. The transactions covered by the contracts were not in respect of incomplete machines. The contracts were for copier with drum. In the light of these circumstances, and applying the legal principles referred to earlier, we hold that the value of drum has to be included in the assessable value of copier. Cleaning Cassette This item was also not being fitted in the machine at the time of clearance and was being supplied separately. We have observed the function of this item in copiers. During the process of copying a part of the black colour of the toner and developer adheres to the drum and unless the drum is cleaned, the black colour on the surface of the drum will adhere to the next blank paper on which the image of the matter is to be transferred and the next copy will not be clear. It is not like the cleaning cassette of VCR which is to be inserted only when the head requires cleaning. In the case of copier, the cassette has to be in position when it is in operation. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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