Customs, Excise and Gold Tribunal - Delhi
C.C.E. vs Air Control And Chemicals Engg. Co. Ltd. on 5 January, 1996
Equivalent citations: 1997(94)ELT171(TRI-DEL)
ORDER G.A. Brahma Deva, Member (J)
1. In this case the issue involved is pertaining to Turnkey project and bought out items and erection/installation, supervision charges to be considered for assessment purpose. The facts of the case in brief are that M/s. Air Control & Chemicals Engg. Co. Ltd. are manufacturing certain plants/equipments for the manufacture of 'man-made fibres'. Industries and such plants/equipments are fabricated and transported to the site for installation/erection and commissioning the same thereof and for this purpose the assessee entered into contract with the purchaser separately one for the fabrication and supply and the other for installation/erection and commissioning of the equipments. They had paid duty on 136 valves purchased by them. The Department issued show cause notice on the ground that the party had taken credit wrongly in respect of valves and accordingly duty was demanded. The Assistant Collector who adjudicated the proceedings has held that Turnkey Project are goods bought out items and erection/installation and supervision charges are to be included in determining the assessable value of Turnkey project. Aggrieved by the said Order the party had filed an appeal before the Collector (Appeals). The Collector (A) accepted the contentions of the party holding that Turnkey Project are not goods and accordingly the question of adding erection/instalment charges does not arise. The Department has come in appeal against that order.
2. Shri P.K. Jain, learned SDR reiterated the grounds taken by the Department urging that Turnkey project undertaken by the respondents are goods and since bought items were supplied along with main product manufactured and cleared by the assessee. The bought items are to be included in the assessable value since it was composite contract.
3. Shri R.S. Dinkar, learned Advocate appearing for the respondents drew our attention to the finding given by the Assistant Collector that the party had entered into contract for supply of main equipments and for supply of bought out items. He submitted that the Collector (Appeals) has given clear finding for Turnkey Project cannot be considered excisable goods and also he decided the issue in favour of the party holding that the cost of bought out items and other installation and supervision charges are not to be included following the ratio of the number of decisions referred to in his order. It was the contention of the Department that bought out items are essential and integral part of the main equipment necessarily they are to be included in the assessable value of the product.
4. We have carefully considered the matter. We find that the Collector (Appeals) has analysed the issue correctly holding that the items in question i.e. Turnkey Project is not excisable goods. He is also correct in holding that the cost of bought out items, installation and supervision charges cannot be included in the assessable value in the facts and circumstances of the case. The relevant portion of the order reads as under :-
"I have carefully gone through the records of the case, both the impugned order passed by the lower authority as well as arguments in the case of Chemical Vessels and Fabricators Ltd., Faridabad that installation and erection at site of plant and machinery which are attached to earth and are not intended to be moved thereafter do not bring into existence any 'goods' as defined in the Sale of Goods Act, 1930 and, therefore, such charges made by the petitioners are not liable to duty of Central Excise, the same view has been also held in the case of Arlabs Ltd. v. A.K. Bandyopadhyay -1981 (8) E.L.T. 684 (Bom.) and by my predecessor in the case of Lipi Boilers Pvt. Ltd., Aurangabad v. Assistant Collector, Aurangabad, Order-in-Appeal No. B-500/PN-73/83, dated 9-3-1983. In this connection, I refer to the decision of the Tribunal in the case of J.N. Export Industries, Junagadh v. Collector of Central Excise, Ahmedabad -1983 (14) E.L.T. 2390 wherein it has been held that the plant and machinery attached to earth which are assembled or erected at site out of duty paid goods cannot be considered as excisable goods, if firmly attached to earth even by bolts and nuts.
The ratio of the above cited decisions are equally applicable in these appeals also. As such I do not wish go in other contentions and submissions made by the appellants. Both the impugned orders are set aside and allow both the appeals accordingly."
5. On going through the submissions and in view of the clear finding given by the Collector (Appeals) concurring with this view we hold that item in question is not excisable goods and since we do not find any infirmity in the impugned order passed by the Collector (Appeals) we uphold the impugned order of Collector (Appeals) and reject the appeal filed by the Department.