Customs, Excise and Gold Tribunal - Delhi
Collector Of C. Ex. vs Radiant Electronics Ltd. on 16 December, 1994
Equivalent citations: 1996(85)ELT102(TRI-DEL)
ORDER G.A. Brahma Deva, Member (J)
1. These are 9 appeals filed by the Department involving common issues. Therefore, they are clubbed together and are being disposed of by this common order.
2. Shri G.K. Mundhra, learned Representative, appearing for the party submitted that whether installation and commissioning charges are to be included in the assessable value of Electronics Automatic Private Branch Exchange (EPABX) manufactured by the party is an issue to be considered in Appeal Nos. E/5714 and 5715/92A and in the remaining appeals in addition to the above issue, whether cost of cable and cabling charges is to be included in the assessable value, is also to be considered.
3. M/s. Radiant Electronics Ltd., Bhubaneshwar submitted a few price lists in part II declaring the prices of Electronics Automatic Private Branch Exchange (EPABX) manufactured by them for approval. Assistant Collector while finalising the approval of the price lists held that installation and charging of telephones plus cabling charges were includible in the value of the EPABX and, accordingly, ordered that amount should be added to the value declared in the price lists. It was contended before the authorities below that there was no nexus between the manufacturing activities and these charges and, accordingly, the installation/commission charges as well as cabling charges were not to be included in the assessable value since they were being option in nature. They also submitted that all these activities are undertaken outside the factory of manufacture of EPABX and as such has got no bearing on the value of EPABX. As regards installation commission charges the contention of the party was accepted by the Collector (Appeals) and inter alia he directed the Assistant Collector to redetermine the assessable value after excluding the extra charges realised for commissioning the telephone instruments which were bought out items. It seems in some cases even after remand, the Assistant Collector held that installation and commissioning charges shown in the contracts were includible in the assessable value of EPABX. These orders were again challenged by the party before the Collector (Appeals) and in turn the Collector (Appeals) again remanded the matter observing that the Assistant Collector was found to comply with the directions as given in earlier order. As regards cabling charges he has remanded the matter with a direction to redetermine the assessable value. Against all these orders the Department has come before us by way of these appeals.
4. In the Grounds of appeals the Department has taken the plea that the Collector (Appeals) has erred in his order in holding that the extra installation/commission charges are not relatable to the assessable goods, i.e., EPABX system. But on the scrutiny of the relevant price list alongwith contract papers in respect of the price List, it is noticed that the assessee has collected Rs. 150/ to Rs. 200/ per Telephone line of the EPABX. Therefore, the contention of the Collector (Appeals) that no extra installation charges were recovered from the customers where EPABX system were supplied, without Telephone connection is not correct. It was also contended that the assessees were selling EPABX system which unless installed does not become functional and installation and commission charges has, therefore, a direct bearing on the sale of the system. Since these charges will enrich the value of product and any expenses on that account to enrich the marketability of the product is liable to be included in the assessable value in term of Supreme Court Judgment in the case of Bombay Tyre International. These grounds have been reiterated in the Written Submission filed by the learned Departmental Representative and as regards the issue of cabling charges, it has been stated that Department has no objection for remanding the matter since such identical issue in the case of same assessee has already been remanded by the CEGAT vide Order No. 14/93-A, dated 30-12-1993 in Appeal No. E/1983/92A.
5. It was contended on behalf of the party that issue with reference to installation and commission charges has already been covered by a series of cases including latest on this issue in the case of Uptron India Ltd., v. Collector of Central Excise, Allahabad [1994 (73) E.L.T. 848] Shri Mundhra said that activity carried out by the party much after the removal of EPABX and installation commission charges as such are not includible in the assessable value of EPABX and in support of his contention he also referred to the following decisions :
1. C.C.E. v. Simmy Computers (P) Ltd. -1988 (33) E.L.T. 787 [Para 5(3)]. 2 . C.C.E. v. Intercom Engineers Ltd., - 1987 (28) E.L.T. 458 (Tribunal) (Para 5).
3. I.A.E.C. Bokers Pvt. Ltd., v. C.C.E. -1990 (48) E.L.T. 388 (Tribunal).
4. Indian Hume Pipes Co. Ltd. v. C.C.E. -1994 (70) E.L.T. 752 (Tribunal).
As regards cabling charges, it was submitted that cost of cable and cable laying charges for laying of the bought out cables at the buyers' premises cannot be included in the assessable value of EPABX, since that activity was nothing to do with the manufacturing activity of that product. That installation of cables are only optional and are undertaken only at the instance of the customer. This is a work which does not enrich the value of the product since EPABX is one complete instrument and it does not need this additional item to become functional. He also pointed out that Assistant Collector vide his different orders sometimes included cabling charges in the assessable value while in some other cases excluded the same. He drew our attention to the relevant orders in Appeal Nos. E/1237/94-A, 1238/94-A and 1240/94-A where cost of cabling charges was not included and, accordingly, the Collector (Appeals) has rightly observed that Assistant Collector's order on cabling charges is not consistent. He said that cables are bought out items and are dealt with by the assessees only as part of their trading association and as part of their manufacturing activities. Cable is not an integral part of EPABX but is only an optional accessory and same should not be included in the value of EPABX. He said that the very issue was considered by the Tribunal in the case of Webel Telecommunications (I) Ltd.. v. Collector of Central Excise, Calcutta, reported in 1987 (32) E.L.T. 453 wherein it was held that for the purpose of assessment of base station and walkie talkies manufactured by the assessee the value of cable which is not an integral part of the sets but is an optional accessory should not be included in the value of sets. This view was upheld by the Supreme Court since the appeal filed by the Department was dismissed as reported in 1992 (58) E.L.T. at page A145.
6. We have carefully considered the submissions made by both sides. We find now it is settled position that installation and commissioning charges are post-manufacturing expenses and this activity has no nexus with manufacturing and marketability and as such, they are not includible in the assessable value. This issue has been squarely covered by the decision in the case of Uptron Ltd., (Supra) as it was rightly pointed out by the learned Representative of the Party. Accordingly, we find that the Collector (Appeals) was right in directing the Assistant Collector to determine the assessable value of EPABX after deducting the charges realised in respect of installation/commission charges. As long as the installation and erection charges are separately realised, depending upon the type of work done by the assessee they cannot be added to the assessable value of goods, because the installation and erection are not an activity amounting to manufacture of excisable goods. As regards cabling charges, we find that Collector (Appeals) is right in observing that Assistant Collector's finding was not consistent in this issue, since in some of his orders he included cabling charges in the assessable value while in some other cases excluded the same. Different circumstances warranting to disallow the cabling charges were also not substantiated by the Department before us. When bought out items are supplied besides manufactured articles the value of such bought out articles is not includible even if they are essential for the operation of manufactured goods provided they are not fitted or attached to the goods before clearance and no process is undertaken for such bought out item. Further the view expressed by the Tribunal in the case of Webel Telecommunication (I) Ltd., (Supra) that the value of cable which was not an integral part of the set but an optional accessory should not be included in the assessable value of base station and Walkie talkies manufactured by the Company was confirmed by the Supreme Court. It has been specifically pleaded before us that it was only an option and this activity was undertaken by the party whenever the customer specifically asked for it and not otherwise. Since this aspect was not looked into by the Adjudicating Authority and in the absence of clear finding, we are of the view that this issue requires reconsideration since identical issue has already been remanded by the Tribunal as submitted by the learned Departmental Representative. This limited issue in all these appeals may be looked into by the concerned Assistant Collector and to pass an appropriate order in accordance with law after affording an opportunity to the party. Accordingly, we do not find any infirmity in the impugned order passed by the Collector (Appeals) on both the issues in all these appeals.
7. Thus, these appeals and Cross Objections filed by the Party in Appeal Nos. E/5714, 92A and 5715/92A are disposed of in the above terms.