Customs, Excise and Gold Tribunal - Bangalore
Keltron vs Commissioner Of Central Excise on 4 December, 2003
Equivalent citations: 2004(166)ELT68(TRI-BANG)
ORDER
K.K. Usha, J. (President)
1. The above appeals are at the instance of the assessee. Appeal E/73/2002 and E/176/2002 arise out of a common Order-in-Appeal dated 7-11-2001 passed by the Commissioner of Central Excise (Appeals), Cochin in Appeal Nos. E/331/98 and 332/98. Appeal Nos. E/618/2002 and E/837/2002 arise out of order passed by the Commissioner of Central Excise (Appeals), Cochin, dated 26-3-2002 and 30-4-2002 respectively. Since the issues arising for consideration in the above appeals are common we propose to dispose of the appeals under a common order.
2. Appellants are manufacturers of various parts and assemblies thereof for the Attendance Data Management Systems (ADAMS). Some of the parts for ADAMS are purchased by the appellant from outside and supplied along with the manufactured parts to the customers. Appellant was not including the value of the bought out items in the assessable value of ADAMS supplied to the customers. Show cause notices were issued to the appellants alleging that bought out items like uncoded cards, cables, junction boxes, etc., form an integral part of ADAM and, therefore, their value has to be taken into consideration for the purpose of payment of duty. Show cause notice also demanded duty on the software provided by the assessee. Duty demand under show cause notices dated 1-7-97, 4-6-97 and 11-8-97 were confirmed in its entirety by the original authority. The Commissioner (Appeals) under his order dated 7-11-2001 affirmed the order passed by the original authority except to the extent of duty demand on interest on advance. The above order of the Commissioner (Appeals) is the subject-matter of Appeal E/73/2002 and E/176/2002.
3. Similar show cause notices were issued to the assessee for the period August, 1997 to May, 1998 and August, 1999 to December, 1999. The original authority took the view that the appellant is liable to pay duty on the value of un-coded cards, cable and junction boxes. The duty demand on software was dropped. Commissioner (Appeals) under two orders dated 26-3-2002 and 30-4-2002, which are the subject-matter of Appeal E/618/2002 and E/837/2002, affirmed the above finding of the original authority.
4. It is the case of the appellant that bought out items do not undergo any manufacturing process in their factory and no value addition is done on the goods; they are supplied separately to the customers along with goods manufactured by them; the use of bought out items arise only at the site of the customers and therefore bought out items do not form an integral part of the goods manufactured by them. It is also contended that they have not availed Modvat credit of duty on the bought out items. Under these circumstances the appellant submits that they are not liable to pay duty on the bought out items. According to the appellants the ADAMS is not a single equipment or machinery but involves the integration of all the component parts through cable and accessories. Appellants manufacture only a few components and they clear them to the site of the customers on payment of duty. They buy uncoded cards, cables, junction boxes and software from others and clear them as such to the site of the customers. They do not fix or attach the bought out items to the components manufactured by them when they clear the components from the factory. It is also submitted that bought out items were required by the customers according to their specification and that they were optional. Reliance was placed on the following decisions of this Tribunal to support their contention :
Diamond Clock Mfg. Co. Ltd. v. CCE, Pune, 1988 (34) E.L.T. 662. CCE, Meerut v. Friction Materials, 1996 (86) E.L.T. 685.
Jai Madhu Corporation v. CCE, Jaipur, 1998 (102) E.L.T. 44.
Tata Telecom Ltd. v. CCE, Cochin, Final Order No. 358/03, dated 13-2-2003 [2003 (161) E.L.T. 581 (Tribunal)].
5. Learned Departmental Representative would submit that the appellant has not produced any material to show that bought out items are optional and that they are not integral part of the ADAMS. He also points out to the finding of the Commissioner (Appeals) in the order dated 7-11-2001 that the appellant has not proved that the bought out items which were brought into the factory were cleared without subjecting it to any testing or conditioning making it suitable for the goods manufactured by the appellant. Learned DR brought to our notice an earlier order passed by this Tribunal (Final Order No. 2295/97, dated 29-8-97) in the case of the appellant itself. In the above proceedings the dispute relating to bought out items such as junction boxes, cable, etc., arose. Since the assessee had not produced sufficient materials in support of its contention that such bought out items are not integral parts of the traffic control unit supplied by the appellant, it was agreed by the assessee that the proceedings could be finalised giving them an opportunity to establish its contention in future proceedings. There was also a request for granting benefit of Modvat credit in respect of the components which are bought out as duly paid. The Tribunal accepted the above submission. The appeal was closed allowing the appellant to take Modvat credit.
6. After hearing both sides we find that in these proceedings also apart from contending repeatedly that bought out items are not integral part of ADAMS, the appellant has not adduced sufficient material in support of its contention. It is not sufficient to contend that their case is not covered by the decision of this Tribunal in Nichrome Metal Works v. CCE, Pune, 1996 (88) E.L.T. 448. They have not made available even before the Tribunal documents relating to orders placed by its customers, data relating to different parts of ADAMS, inter se relation between the parts; manufactured by them and bought out items. The appellant contends that these bought out items are optional but it has not produced any document in support of the above submission. We find that in the matter of its claim regarding bought out items they have not made any contribution by supply of material supporting the contention after the Final Order No. 2295/97, dated 29-8-97.
7. As regards software we find that in the subsequent orders passed by the original authority and the appellate authority, which are the subject-matter of Appeals E/618 and 837/2002, demand has been dropped. Therefore, there is no justification in sustaining the demand in respect of software for the period covered by Appeal Nos. E/73 and 176/02. We are also of the view that so long as the appellant has to pay duty on the bought out items they arc entitled to take Modvat credit on the same. On this issue we respectfully follow the following direction given by the Tribunal in its order dated 29-8-97 :
"4. We have considered the pleas made by both the sides. In a number of decisions, we have held that where duty is demanded, Modvat credit in respect of the inputs used as final product should be allowed notwithstanding non-filing of the declaration subject to compliance with the other provisions of the Modvat Rules. We do not see any difficulty for the appellants to be able to lay their claim to the Modvat credit in respect of the bought out items since the lower authority has demanded duty in respect of those items as one entity. The appellants should approach the lower authority in this regard and stake their claim and the lower authority shall consider their claim in this regard notwithstanding non-filing of declaration, as we have held in several cases."
8. In the result, we dismiss Appeal E/618 and 837/2002. In respect of Appeal Nos. E/73 and 176/2002, we hold that the demand of duty on software cannot be sustained. The appeals stand disposed of subject to the above finding.
9. Appellant will be entitled to claim Modvat credit for the entire period covered by the appeals as observed above. We make it clear that it will not stand in the way of the appellant establishing before the authorities in other proceedings by producing sufficient material to show that the bought out items are not integral part of ADAMS.