Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs Evergreen Engg. Co. Pvt. Ltd on 26 May, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. E/1505/05-Mum E/CO/274/05-Mum (Arising out of Order-in-Appeal No. BR/18/M-IV/2005 dated 21.1.2005 passed by Commissioner of Central Excise (Appeals), Mumbai-IV) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) and Honble Mr. Devender Singh, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Commissioner of Central Excise, Mumbai-IV Appellant Vs. Evergreen Engg. Co. Pvt. Ltd. Respondent Appearance: Shri H.M. Dixit, Assistant Commissioner (AR), for appellant Shri R.V. Shetty, Advocate, for respondent CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Devender Singh, Member (Technical) Date of Hearing: 26.5.2016 Date of Decision: 26.5.2016 ORDER NO Per: M.V. Ravindran
This appeal is filed by the Revenue against order-in-appeal No. BR/18/M-IV/2005 dated 21.1.2005.
2. The relevant facts that arise for consideration are the respondent herein is a manufacturer of monoliths/signages (hereinafter referred to as the goods) of various types. It is the case of the Revenue that during April 1999 to December 2003, the respondent manufactured and cleared the goods on payment of duty at the sites of BPCL and IOCL and erected and commissioned the same at the site as per the contract. The respondent had recovered freight charges on account of bringing such goods and also charged various amounts for erection, commissioning, installation and third party inspection charges. It is the case that these charges have to be included in the value for discharge of central excise duty. Show cause notice was issued demanding differential duty, which was adjudicated by the authority after following due process of law and the central excise duty as well as interest thereon was confirmed and penalties were also imposed. Aggrieved such an order, an appeal was preferred before the first appellate authority who, after considering the facts of the case and various binding decisions, set aside the impugned order and allowed the appeal.
3. Learned departmental representative arguing on behalf of the Revenue, draws our attention to the facts of the case. It is his submission that the goods, which are described as monoliths, are in fact packed in bundles and cleared in packages form which would mean that they are not monoliths or signages but parts and components; exact and precise nature of the goods so cleared is also not mentioned in the invoices. He would submit that the charges for erection and commissioning and for pre-delivery inspection charges, which has been collected by the respondent are includible in the value of the goods as post July 2000, transaction value regime came into picture, due to which any amount which is collection in relation to the same, duty liability has to be discharged. He would submit that the monoliths/signages will come into existence only when there is a permanent light source to the illuminated signboard. He would rely upon the Boards circular dated 1.7.2002 which clarified that amounts collected for erection, installation and commissioning charges are includible in the assessable value for discharge of excise duty.
4. Learned counsel appearing on behalf of the respondent draws our attention to the contract entered by them with BPCL and IOCL and submits that the freight charges which are collected by the respondent as well as the erection charges are contracted to be paid as extra and the inspection of the goods will be done by BPCL in above to which, if required, further inspection is done for which there was no charge. He would submit that the issue is now squared covered by the judgments of the Tribunal in the case of Madras Power Supplies vs. CCE, Chennai reported in 2002 (149) ELT 369, Apollo Tyres Ltd. vs. CCE, Cochin reported in 2003 (160) ELT 836 and the judgment of the Honble Supreme Court in the case of Thermax Ltd. vs. CCE reported in 1998 (99) ELT 481 (SC).
5. On careful consideration of the submissions made by both sides and perusal of records, we find that the issue which falls for our consideration is whether the amounts collected by the respondent as charges towards erection, installation and commissioning charges and pre-delivery inspection charges have to be added in the assessable value of the goods cleared from the factory.
6. On perusal of the sample invoices and the contract entered by the respondent with BPCL and IOCL, we find that the invoice prepared by the respondent clearly indicates the goods which were cleared were described as monoliths in knocked down condition (CKD). The discharge of duty liability is also on the entire value of monoliths/signages. This would indicate that what was cleared from the factory premises of the respondent was a complete monolith. The contract specifically indicates that erection and commissioning of the said monolith can be undertaken by the respondent for an additional payment. It is nowhere indicative in the contract that the respondent was obliged to do the said installation and erection and no one else was to be appointed for such work. In the absence of any restrictive clause in the agreement, we find that the amount received by the respondent towards erection/installation/commissioning charges are not includible in the assessable value so also the amounts received for pre-delivery inspection charges, as these charges are not attributable for manufacture of goods.
7. We find that the learned counsel was correct in submitting that the issue is now squarely covered by the judgment of the apex court in the case of Thermax Ltd. (supra). We reproduce the ratio which is in paragraphs 9 to 13.
9. The only question, therefore, with which we are? left in these appeals is whether the erection and commissioning charges for which the appellants had separately charged from its customers could be legally included in the assessable value of the goods, namely, the Boiler manufactured and supplied by the appellants. Or, to put it differently, whether the installation and commissioning charges are exigible to excise duty? This controversy stands concluded by two decisions of this Court.
10. In? PSI Data Systems Ltd. v. Collector of Central Excise, 1997 (89) E.L.T. 3 (S.C.), it was held that the charges for installation of computers and training of customers personnel to operate and maintain it was not includible in the assessable value of the computer. The Court even went to the extent of saying that the value of softwares sold along with the computer was not includible in the assessable value of the computer.
11. In?Mittal Engineering Works (P) Ltd. v. Collector of Central Excise, Meerut, 1996 (88) E.L.T. 622 (S.C.) = (1997) 1 SCC 203, Mono Vertical Crystallisers which were used in sugar factories for exhausting molasses of sugar were assembled, erected and attached to the earth at the site of the customers sugar factory. The process involved welding and gas cutting as deep Mono Vertical Crystallisers had to be assembled, erected and attached to the earth by a foundation at the site of the sugar factory. It was held that the erection and installation of a plant was not excisable.
12. In coming to this conclusion, reliance was? placed on an earlier decision of this Court in Quality Steel Tubes (P) Ltd. v. Collector of Central Excise 1995 (75) E.L.T. 17 (S.C.) = (1995) 2 SCC 372, in which also it was held that erection and installation charges cannot be included in the assessable value of the goods. It was held thus :-
erection and installation of a plant cannot be held to be excisable goods. If such wide meaning is assigned it would result in bringing in its ambit structures, erections and installations. That surely would not be in consonance with accepted meaning of excisable goods and its exigibility to duty.
13. In view of the above, the judgment passed by the? Assistant Collector as also by the Tribunal that installation and commissioning charges have to be treated as assessable value of the goods supplied by the appellants are not correct and are liable to be set aside. Since we are disposing of these appeals on merits on coming to the conclusion that the installation and commissioning charges could not be included in the value of the goods, the question of limitation relating to the show cause notice issued under Rule 9(2) read with Section 11A of the Act for the period from 1982-83 to 1987-88 is not decided.
8. In view of the foregoing, we hold that the impugned order is correct and legal and does not suffer from any infirmity. The impugned order is upheld and the appeal is rejected. The cross objection filed by the respondent is also disposed of.
(Pronounced in Court) (Devender Singh) Member (Technical) (M.V. Ravindran) Member (Judicial) tvu 1 6