Custom, Excise & Service Tax Tribunal
M/S. Otis Elevators Company (India) Ltd vs Commissioner Of Central Excise, ... on 30 November, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/3065, 3150/06 (Arising out of Order-in-Appeal No. CPA(644)101/MV/2006 dt. 24.07.2006 passed by the Commissioner (Appeals) Central Excise, Mumbai-I ) For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) Honble Shri Raju, 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 : No
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?
=======================================================
M/s. Otis Elevators Company (India) Ltd.
:
Appellant
VS
Commissioner of Central Excise, Mumbai-V
:
Respondent
Appearance
Shri Gopal Mundra, C.A with
Shri Ginita Bodani, C.A. for Appellant
Shri Ashutosh Nath, Asstt.Commr. (A.R) for respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Honble Shri Raju, Member (Technical)
Date of hearing : 30/11/2016
Date of pronouncement : 05/01/2017
ORDER NO.
Per : Ramesh Nair
The appellants have manufactured and cleared parts and accessories of lift. The appellant undertakes turnkey projects for supply, erection, installation and commissioning work of lifts at the customer site for which they used substantial quantity of bought out items. They supplied their manufactured goods on payment of duty and then undertaken the service of entire works contract. As regard, the supply of the manufactured parts to the site the valuation is done under cost construction method i.e. under Rule 8 of Central Excise Valuation Rules, 2000. Against the total value of the composite contract the appellant received advance payment. The department contends that the notional interest of such advance should be added in the value of the goods manufactured and supplied by the appellant. Accordingly, the demand of differential duty was confirmed for the period July 2001 to December 2002. Being aggrieved by the Order-in-Original the appellant filed appeal before the Commissioner (Appeals), who after giving observation that in which circumstances the interest can be added in the assessable value remanded the matter to the adjudicating authority. Therefore the assessee as well as Revenue both have filed the appeal before us. The Revenues appeal is on the ground that the Commissioner (Appeals) had no power to remand the matter to the adjudicating authority, therefore the order is not proper and legal. The assessee filed appeal on merits that the notional interest of advances cannot be added in the value of the goods manufactured by the appellant.
2. Shri Gopal Mundra, Ld. C.A. along with Ms. Ginita Bodani, C.A. appearing on behalf of the assessee submits that as regard the addition of notional interest in the value of the manufactured goods, the issue has been decided by this Tribunal in the appellants own case reported as Commissioner of Central Excise, Mumbai-IV Vs. Otis Elevator Co. (India) Ltd. 2013 (292) E.L.T. 228 (Tri.-Mumbai), therefore the issue in hand is no longer res integara. He further submits that the appellant is manufacturing parts of lift and supplying at site for execution of the entire turnkey project of erection, installation and commissioning of lift at the site of the customer. Since the parts are not independently sold to the customer but it is cleared by the appellant on own behalf for execution of the project, the value of the such parts is done in terms of Rule 8 of Central Excise Valuation Rules, 2000. According to which, the valuation is required to be arrived at on 110% of the cost of manufacturing. In the cost of manufacturing there is no provision to add the notional profit in the cost of manufacturing therefore in terms of Rule 8 of the Central Excise Valuation Rules, except the cost of manufacture plus 10% notional profit no other element can be added. For this reason, the notional interest on advances cannot be added in the assessable value. He further submits that a small part of the total value of the turnkey project was accepted as advance whereas the portion of appellants manufactured goods is very small as compared to the whole project. Therefore for this reason also, the notional interest of the advance which is not only against the appellants manufactured goods but also towards other bought out items and service of the works contract is involved. He placed reliance on the following judgments:
(i) Commissioner of C.Ex., Mumbai-IV Vs. Otis Elevator Co. (India) Ltd.
2013 (292) E.L.T. 228 (Tri.-Mumbai)
(ii) Commissioner of Central Excise, Mumbai-III Vs. I.S.P.L. Industries Ltd.
2003 (154) E.L.T. 3 (S.C.)
(iii) Commissioner Vs. Lloyds Steel Industries 2005 (189) E.L.T. A67 (S.C.)
(iv) Commissioner Vs. Whirlwind Corporation 2003 (151) E.L.T.A 189
(v) Collector of Central Excise, Vadodara Vs. Dhiren Chemical Industries 2002 (143) E.L.T. 19 (S.C.)
(vi) Paper Products Ltd. Vs. Commissioner of Central Excise 1999 (112) E.L.T. 765 (S.C.)
(vii) Moosa Haji Patrawala Pvt. Ltd. Vs. C.C.E., Mumbai/Aurangabad 2001 (138) E.L.T. 290 (Tri.-Mumbai)
(viii) Commissioner Vs. Lakshmi Precision Tools Ltd.
2004 (183) E.L.T. A65 (S.C.)
(ix) Otis Elevator Company (India) Ltd. Vs. Commr. of C. Ex., Bangalore 2008 (229) E.L.T. 568 (Tri.-Bang.)
(x) Otis Elevator Co.(I) Ltd. Vs. Commissioner of C.Ex. Mumbai-V 2012 (280) E.L.T. 531 (Tri.-Mumbai)
(xi) Otis Elevator Company (India) Ltd. Vs. Superintendent of C. Ex., Range-I 2003 (151) E.L.T. 499 (Bom.)
3. Shri Ashutosh Nath, Ld. Assistant Commissioner (A.R.) appearing on behalf of the Revenue submits that the matter needs to be remanded to the Commissioner (Appeals) for passing a final order. For the reason that the Commissioner (Appeals), has erred in remanding the matter to the adjudicating authority instead of final disposal at his hand.
4. We have carefully considered the submissions made by both the sides, we find that issue in hand is the inclusion of notional interest on the advances received by the appellant against the over all project work of supply, erection, installation and commissioning of lifts at the customer site. It is observed that the portion in the over all project which represent the clearance of assessees manufactured goods is less than 50% of the over all value of the project cost. Therefore for this reason interest is not prima facie includible in the assessable value. There is a force in the submission of the appellants when the valuation of the goods manufactured and supplied by the assessee is done and accepted in terms of Rule 8 of the Central Excise Valuation Rules, 2000. No further addition can be made over and above 110% of the cost manufacture of the final product that is various parts of lifts. It is also observed that in the appellants own case reported as Commissioner of Central Excise, Mumbai-IV Vs. Otis Elevator Co. (I) Ltd. 2013 (292) E.L.T. 228 (Tri.-Mumbai) it was held that interest on advances cannot be included in the assessable value. In view of the above, it prima facie appears that interest in not includible in the assessable value however, since the Commissioner (Appeals) has not passed the final order, at this stage, we cannot dispose of the matter finally. Therefore, we remand the matter to the Commissioner (Appeals) for passing a final order by taking into consideration our above observation. The appeals are allowed by way of remand to the Commissioner (Appeals).
(Pronounced in court on 05/01/2017)
(Raju)
Member (Technical)
(Ramesh Nair)
Member (Judicial)
SM.
6
Appeal No. E/3065, 3150/06