Custom, Excise & Service Tax Tribunal
Cce, Bhopal vs M/S R.P.G. Transmission Ltd on 20 February, 2013
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI
Court No. III
E/CO/123/2005
E/332/2005-EX[DB]
(Arising out of Order-in-Original No.02-05/Commr/CEX/04, dated 12.02.2004 passed by the Commissioner & Central Excise, Bhopal)
Date of Hearing: 08.02.2013
Date of Pronouncement:20/02/2013
CCE, Bhopal Appellant
Vs
M/s R.P.G. Transmission Ltd. Respondent
Appearance:
Appeared for the Appellant: Shri, Ranjana Jha, Adv.,
Appeared for the Respondent: Shri, Amit Jain, DR
Coram: Honble Mrs. Archana Wadhwa Judicial Member
Honble Shri Sahab Singh, Technical Member
Stay Order 55587/2013
Per Sahab Singh:
This is an appeal filed by Commissioner Central Excise Bhopal against the order in original No. 02-05/Commr/CEX/2004 dated 12.02.2004.
2. Briefly stated the facts of the case are that M/s. R.P.G. Transmission Ltd. (here in after referred to as respondents) are engaged in the manufacture of transmission line tower parts falling under chapter subheading 7308.90 of the first Schedule to the Central Excise Tariff. On scrutiny of records it was found that respondents are having contracts with power Grid Corporation of India Ltd. and state Electricity Boards for design, type testing and fabrication of Transmission line towers. The Respondents had cleared tower components and parts on payment of duty and using these parts towers were erected at the sites of their customers. Such proto-type goods were subjected to type testing and the respondents were collecting type-testing charges, which form part of the contract price as per the agreement with their customers. These testing charges were not being included in the assessable value by the respondents. The testing of proto-type towers were carried out for actual execution of the contract entered into between the Respondents and their customers. All the charges recovered by the Respondent from their customers on account of testing of the proto-type towers in terms of the contract preceded the manufacturing of the tower parts actually delivered by them and such testing of Proto-type towers was not an independent process unconnected with actual manufacture of tower parts. Therefore department felt that the testing charges are includible in the assessable value of tower parts and a SCN was issued to the respondents on 03.02.2000 demanding duty. For the subsequent periods, 3 more Show Cause Notices were issued to them dated 01.02.2001, 28.05.2001 and 25.06.2001. All the four Show Cause Notices were contested by the respondents and Commissioner vide impugned order has dropped the proceeding against the respondents. Revenue has challenged this order before this Tribunal in the present appeal.
3. The Ld DR appearing for the Revenue submits that the Commissioner has dropped the demand on the ground that processes of cutting, straightening, punching, drilling, galvanizing of duty paid angles were undertaken in manufacture of proto-type tower and these processes did not amount to manufacture. She submits that this finding of Commissioner is not proper in as much as Supreme Court in case of Commissioner Central Excise Jaipur Vs. Man Structurals Ltd. 2001(130)ELT 401SC has set aside the judgment of the Tribunal and remanded the appeal to the Tribunal on the issue of manufacture. She submits that this decision of Supreme was not considered by the Ld Commissioner. She submits that Commissioner has relied on the various decisions holding that of activity under taken by the respondents did not amount to manufacture. These decisions will not be applicable in view of the Supreme Court decision in Man Structurals case. As regards the issue of type testing charges it is the submission of the Revenue that testing charges are collected by the respondents from the customers as per contract with them and are very much includable in the assessable value. Ld DR further submits that Commissioner has dropped the Show Cause Notice taking a view that processes undertaken do not amount to manufacture. She therefore submits the Commissioners order is required to be set aside and Revenue appeal allowed.
4. Ld Advocate appearing for the respondent submits that the demand has rightly been dropped by the Commissioner, and Commissioner has held that since the processes under taken by them do not amount to manufacture the question of adding type testing charges in the assessable value becomes irrelevant. He submits that in various decisions of the Tribunal it has been held that type testing charges are not includible. He therefore submits that the demand has rightly been dropped by the Commissioner.
5. After hearing both the sides we find in the present case four Show Cause Notices were issued to the respondents demanding duty on amount of type testing charges recovered by the respondents from their customers as per the contracts. The four Show Cause Notices were decided by the Commissioner vide impugned order. On going through the order in original passed by the Commissioner we find that in Para 16 he has held as under:
16. Thus from the foregoing, it is now apparently clear that at the relevant time, the processes carried out by the assessee did not amount to manufacture and no excisable goods were manufactured by them in their factory. As such when no excisable goods were manufactured, the assessee were not required to pay any duty at the time of removal of their final products. I, therefore, fully agree with the assessee that when their final product was not dutiable, the question of inclusion of type testing charges in their assessable value did not arise. The issue of inclusion of type testing charges in the assessable value has become irrelevant as at the relevant time, the assessee were not required to pay any duty on the goods cleared by them. As such, the demand of duty on type testing charges collected by the assessee during the period February 1995 to December 2000 is not sustainable irrespective of the fact as to whether on merits the issue of inclusion of type testing charges in the assessable value of the goods holds good or otherwise. Held accordingly.
On going through the above Para we find that Commissioner has held that their final products were not dutiable as the processes carried out by the respondents did not amount to manufacture. Commissioner has not examined inclusion of the type testing charges in the assessable value on merit. He has simply stated that the issue of type testing charges is irrelevant as the respondents were not required to pay duty on goods. We find the Commissioner has not considered the observations of the Supreme in case of its decision in case Commissioner Central Excise Vs Man Structurals (Supra). In fact the revenue has challenged these findings of the Commissioner that the processes undertaken by the respondents do not amount to manufacture though this was not a issue before the Commissioner in the Show Cause Notice. We are therefore of the view that the matter needs to be remanded to the Commissioner for decision on merits in view of decision of Honble Supreme Court in the case Man Structural Ltd. and subsequent decisions given by the Tribunal on issue of manufacture and there after Commissioner should decide the demand on merit on inclusion of type testing charges in the assessable value. Both sides are free to produce the evidences in support of their contentions including the case law on the subject before the Commissioner. Appeal is disposed of by way of remand.
(Order pronounced in the Court on 20/02/2013) Archana Wadhwa Member (Judicial) Sahab Singh Member (Technical) Neha* ??
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