9911796707
TMI Blog2024 (8) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... is not the case of the respondents that the said bought-out items are supplied by them as per the requirement of the Indian Army; it is also not the case that these items are only accessories of the items supplied by them and are not essential parts of the items supplied by them. Records indicate that the respondents are supplied pre-fabricated buildings to the Indian Army; the invoices issued by them were for the supply of pre-fabricated buildings only and not for the items which they have claimed to have supplied. The assessment of the items cleared by a manufacturer is to be made on the basis of what is cleared from the factory. It is evident that the appellants have supplied pre-fabricated buildings, although in a disassembled manner, v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile discharging duty, they have only on the parts and components manufactured by them in their factory against the supply and claimed that the other items were bought out items; as the respondents are supplying the entire prefabricated shelters as per the work order given by the Indian Army, Revenue entertained an opinion that the value of such bought-out items should be included in the assessable value; a Show Cause Notice dated 05.07.2011 demanding Central Excise duty amounting to Rs.1,29,42,111/- along with interest and penalty was issued to the appellants; learned Commissioner of Central Excise, Rohtak vide impugned order dated 28.02.2013 dropped the proceedings holding that the appellants have merely traded in the bought-out items and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obvious that the respondents have split up the price to evade payment of Central Excise duty. He relies on the following cases and submits that the value of the bought-out items requires to be included in the assessable value. Mittal Pipe Manufacturing Company 2002 (146) ELT 624 (Tri. Delhi) upheld by Hon ble Supreme Court 2008 (231) ELT 196 (SC) National Steel Industries 1999 (111) ELT 80 (Tri.) Kerala State Electronics Development Corporation 1994 (71) ELT 508 (CEGAT) Frick India Ltd. 2007 (216) ELT 497 (SC) 3. None for the respondents. Heard learned Authorized Representative for the Department and perused the records of the case. It is seen that the appellants are supplying pre-fabricated buildings/ shelters to the Indian Army as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sification decides the applicable rate. It is followed by valuation i.e. value on which the rate is to be applied. The concept of classification is, therefore, different from the concept of valuation . In the present matter there is confusion in application of the aforestated two concepts by the Commissioner. In our view, the thrust of the show cause notice is towards undervaluation and not classification. This is made clear even in the order of the Commissioner vide para 53 which reads as under: 53. On consideration of the arguments of both sides and the facts on record I find that show cause notice dated 1-10-86 proposed classification of flywheel, safety valve and filter under SH 8414.91 of CET 1985. The Show Cause Notice dated 10-11-86, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product under different headings/sub-headings of the tariff. Lastly, under Note 2(a) to Section XVI of the Central Excise Tariff Act, 1985 as well as Note 2(a) to Section XVI of HSN read with Explanatory Note referable to Parts of a Machine in HSN clarifies that payment of duty at the appropriate rates, relevant to the respective headings alone, shall apply. In the present case, as stated above a complete compressor stood cleared under tariff Heading 84.14. Duty has been paid thereof. Similarly, safety valves were cleared by the assessee on payment of duty under tariff Heading 84.81. Lastly, filters were also cleared by payment of duty under tariff Heading 84.21. In the circumstances, on the question of classification the Tribunal was righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direct the Commissioner to de novo consider the question of valuation. In this connection, the Commissioner will call for the cost statements and shall also ascertain the manner in which the assessee has priced its goods. The Commissioner may also consider invocation of Section 14A of the Central Excise Act, 1944 which deals with special audits in certain cases . In our view, in the present matter costing as a concept will play an important role and, therefore, if the Commissioner so deems fit he can order special audits and call for the report of the cost accountant to assist him (Commissioner) to arrive at the correct value of the entire package cleared by the assessee from its factory gate. 5. None appeared for the respondents. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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