Custom, Excise & Service Tax Tribunal
The Commissioner Of Central Excise vs M/S Electronics & Controls Power on 14 September, 2010
THE CUSTOMS EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, SOUTH ZONAL BENCH, WTC BUILDING, FKCCI COMPLX, K.G. ROAD, BANGALORE Date of hearing: 14.09.2010 Date of decision: 14.09.2010 Central Excise Appeal No: 504/2005 (Arising out of Order-in-Appeal No 53/2005 dated 28.02.2005, passed by the Commissioner of Central Excise (Appeals), Bangalore) For approval and signature Honble Mr P.G. Chacko, Member (Judicial) Honble Mr P. Karthikeyan, Member (Technical) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules 1982? No 2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules 1982 for publication in any authoritative report or not? No 3. Whether Their Lordships wish to see the fair copy of the Order Seen 4. Whether Order is to be circulated to the Departmental authorities Yes The Commissioner of Central Excise ..Appellants Bangalore Vs M/s Electronics & Controls Power Systems Pvt Ltd., .Respondents
Present for the Revenue : Mr D.P. Nagendra Kumar, JCDR
Present for the Assessee : Mr K. Parameshwaran, Adv
Coram: Honble Mr P.G. CHACHO, Member (Judicial)
Honble Mr P. Karthikeyan, Member (Technical)
ORDER No______________________
PER P.G. CHACKO
In this appeal filed by the Revenue, the short question to be considered is whether the cost of battery bought out from the local market and cleared as part of UPSS (Uninterrupted Power Supply System) from the Branch Offices/Sales Offices of the respondent- company during the period of dispute (April 2000 to August 2001) was liable to be included in the assessable value of the UPSS. The original authority held that the cost of battery was includible in the assessable value, but the first appellate authority set aside that decision and held to the contra. The Revenue is aggrieved by this decision of the learned Commissioner (Appeals). Upon examination of records, we note that UPSSs without battery were cleared from the factory to branch offices/sales offices (so called in the assessees parlance) on payment of duty on the assessable value of the goods in the form they were cleared from the factory. We further note that, at the branch office/sales office, batteries bought out from the market were clubbed with the above goods and UPSSs with battery were cleared from the premises to the ultimate customers. It is the case of the Revenue that the testing/charging/synchronizing of the battery with the equipment manufactured and cleared from the factory was done at the branch office and expenses thereof were added to the manufacturing expenses in their books of accounts and, therefore, complete UPSSs with battery should be held to have been manufactured and cleared by the respondent. In this view, the respondent should have paid duty on the complete system with battery included. It appears that the appellant has considered the branch office to be an extension of the factory. Learned JCDR has advanced an argument to this effect. He has also claimed support from certain earlier decisions of the Tribunal in the assessees own cases.
1) Kerala State Electronics Development Corporation Ltd., Vs Collector of Central Excise, Cochin [1994(71) ELT 508 (T)
2) Final Order No 879/2010 dated 9.6.2010 in Appeal No E/782/2002 (Electronics and Controls Power Systems Pvt Ltd., Vs CCE Bangalore)
3) CCE Chennai Vs Mumeric Electronics Pvt Ltd., [2001 (138) ELT 1202 (Tri-Che)] In all the cases cited by the JCDR, complete UPS system including battery bought out from the market was cleared from the factory and the cost of battery was held to be includible in the assessable value of the UPSSs.
2. Learned JCDR has also shown us copies of a few invoices/bills issued by the respondent from their branch office to various customers. These invoices describe UPSSs with battery as one complete commodity and also indicate that trade tax was paid @ 5% on the said commodity. The endeavour of the learned JCDR is to show that the assessee themselves treated battery as an integral and indispensable part of UPSSs.
3. Learned counsel for the respondent, at the outset, submits that a decision rendered by this Tribunal in their own case in favour of the Revenue was appealed against. In this connection, he refers to Commissioner of Central Excise, Bangalore Vs Electronics & Controls [1998(27) RLT 816 (CEGAT). It is submitted that the civil appeal filed by the assessee against the said decision of the Tribunal has been admitted by the apex court. Learned Counsel has also claimed support from the following decisions.
1) Siemens Ltd., Vs CCE [2002(53)RLT 1096(T-Mum)] [Departments appeal against this decision was dismissed by the SC vide 2003 (158)ELT A74 (SC)]
2) CCE Vs A.Z. Electronics [2001(134) ELT 689(T-Mum)]
3) Supercold Refrigeration Systems Pvt Ltd., Vs CCE [2005(119)ECR 58(T-Bang)]{Departments appeal against this decision was dismissed vide 2006(193)ELT A 23(SC)}
4) CCE Vs Jeetex Engg. Co [2001(130)ELT 801(T-Che)]
5) Goetze (India)Ltd., Vs CCE [2004(169)ELT 274(T-Del)] The Reliance has been placed on the above decisions in support of the counsels plea that the cost of bought- out components cannot be included in the assessable value of the goods manufactured and cleared from the factory. It is submitted that the case developed by the Revenue in the present appeal is beyond the scope of the show-cause notice wherein it had not been alleged that UPSSs was cleared as a complete set with battery from the branch office seemingly reckoned as an extension of factory. It was also not alleged in the show-cause notice that manufacturing activities were undertaken in the branch offices
4. We note that, in the impugned order, the learned Commissioner (Appeals) found that the bought-out item (battery) never came to the factory and the same was sold from depot. Thus the Commissioner (Appeals) preferred to assess UPSS in the form it was cleared from the factory. The above finding of fact recorded by the learned Commissioner (Appeals) has not been specifically challenged in this appeal.
5. Moreover, the case sought to be made out by the Revenue in this appeal is not forthcoming in the show- cause notice. The show-cause notice nowhere alleged that the branch offices of the respondent were extensions of the factory and that any part of the process of manufacture was undertaken in such premises so that complete UPSS could be held to have been cleared from the factory on payment of lesser amount of duty. The show-cause notice alleged that testing/charging/synchronizing of battery was done in the branch offices and expenses thereof were added to the manufacturing expenses of the company as borne on the books of accounts. Books of accounts are not found among the documents relied upon in the show- cause notice. No books of accounts have been shown to us by the appellant to support the above allegation. In any case, in the show-cause notice, it is not the case of the Revenue that complete UPSSs were cleared in CKD or SKD condition from the factory on the pretext of clearing parts of UPSS. The show-cause notice contains no reference to the commercial invoices issued by the branch offices of the company. On the whole, the case of the Revenue as embodied in the show-cause notice is like a half-baked cake. If the Revenues case as sought to be developed in the present appeal had been made out in the show-cause notice itself the appellant would have, perhaps, stood to gain. At present, the respondents case that they were only trading in battery at their branch offices and hence its value was not to be included in the equipment cleared from the factory as accepted by the lower appellate authority seems to be cogent. The crucial finding (vide supra) of the lower appellate authority has not been challenged. Therefore, we are of the view that the earlier decisions cited by the learned JCDR, wherein complete UPSSs with battery included was found to have been cleared from the factory, cannot be made applicable to the facts of the present case. Admittedly, in this case, the item cleared from the factory was UPSSs without battery. The place of clearance was the factory. There is no allegation to the contra in the show-cause notice. The goods should be assessed in the form it was cleared from the factory. The Tribunals decisions in other cases of the same assessee, wherein battery was an integral part of the UPSSs in the form it was cleared from the factory, cannot be applied to this case. In this connection, the decisions cited by the learned counsel seem to be supportive of our view. The documents (invoices) produced by the learned JCDR are not of any aid to the case of the Revenue as made out in the show-cause notice. In the result, this appeal of the Revenue gets dismissed.
(Pronounced and dictated in open Court) (P. KARTHIKEYAN) Member(Technical) (P.G. CHACKO) Member (Judicial) /pnr/