Custom, Excise & Service Tax Tribunal
Fluidtherm Technology Pvt. Ltd vs Commissioner Of Central Excise on 14 June, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI Appeal No. E/640/2005 [Arising out of Order-in-Appeal No.20/2005 (M-II) dt. 13.04.2005 by the Commissioner of Central Excise (Appeals), Chennai] Fluidtherm Technology Pvt. Ltd. Appellant Versus Commissioner of Central Excise, Chennai-II Respondent
Appearance:
Shri R. Parthasarathy, Consultant For the Appellant Shri L. Paneerselvam, AC (AR) For the Respondent CORAM :
Honble Ms. Sulekha Beevi C.S. Member (Judicial) Honble Shri V. Padmanabhan, Member (Technical) Date of hearing / decision : 14.06.2017 FINAL ORDER No. 40958 / 2017 Per Bench The appeal is against OIA No.20/2005 dt. 13.4.2005. The brief facts of the case are that the appellants are engaged in the manufacture of electrical furnace and parts thereof (CSH 8514.00). On scrutiny of their RT-12 returns for the month of January, 1994, the appellants received a purchase order dated 04.03.92 from Machine Tools, Prototype Factory, Ambernath, a factory belonging to the ministry of Defence for supply of four numbers of continuous gas carburising furnace along with certain other accessories required for their use at their factory. The appellants had allegedly failed to include in the assessable value of certain items viz. oil quinching tank, washing machine, aluminia sieve shaker, blower for furnace, piping and manifold, jigs and fixtures, auto control systems and certain spares. The Department was of the view that as long as continuous gas carbonizing furnace was manufactured by designing, fabricating, erecting along with factory made and bought out components, duty is to be charged on the entire value of the impugned goods as long as the bought out items form accessory, apparatus of the main machine. Hence a show cause notice dt. 02.08.94 was issued demanding differential duty of Rs.2,18,744/- in respect of seven MODVAT items which they cleared without payment of duty on the ground that the entire value including the bought out items should have been included in the assessable value. Duty demand was confirmed by the original authority and the same was upheld in the impugned order. Aggrieved by the said order, present appeal has been filed.
2. With the above background, we heard Shri R.Parthasarathy, Consultant and Shri L. Paneerselvam, D.R.
3. The learned consultant arguing the case for the appellant submitted that the items for which duty has been demanded were not subjected to any manufacturing process either in their factory or at the customers site. They were not integral part of the continuous gas carbonizing furnace. These items were merely bought out items supplied to the customer at their request. Consequently, the value of these items cannot be subjected to payment of excise duty at the hands of the appellant. Ld. Counsel also relied upon the following case law :
(i) Shriram Bearings Ltd. Vs CCE Patna -
1997 (91) ELT 255 (SC)
(ii) CCE Trichy Vs Neycer India Ltd. 2015 (320) ELT 28 (SC) (iii CCE Delhi-I Vs K.C. Mittal- 2017 (345) ELT 120 (Tri.-Del.)
(iv) CCE Bangalore Vs Southern Batteries Pvt. Ltd.
2016 (344) ELT 939 (Tri.-Bang.)
4. Ld. D.R supports the impugned order. He relied upon section note 4 to Section XVI of Central Excise Act and argued that supplementary items along with the furnace manufactured by the appellant contribute together to a clearly defined function. Accordingly, duty is liable to be paid. He relied upon Tribunal's decision in the case of Asha Pavro Electronics Pvt. Ltd. Vs CCE Mumbai-III - 2002 (143) ELT 543 (Tri.-Mumbai). He submits that duty of excise is charged on goods manufactured in the factory. In the present case, duty has been sought to be levied on items which are not manufactured in the appellants factory, but are procured from outside supplied to the customer along with the goods manufactured in the appellants factory.
5. On perusal of the records, it is also evident that these goods are not supplied as accessories or parts which are used items of erection or commissioning of the furnace supplied by the appellant. In view of these facts, we find no valid reason to charge excise duty on these components bought out and supplied by the appellant.
6. We have carefully considered the various case laws cited by both sides. We find that the issue of levy of excise duty on bought out items is no longer res integra. The Honble Supreme Court in the case of CCE Trichy Vs Neycer India Ltd. (supra) has held as follows :
"[Order]. - The Department/Revenue wanted to add the value of Handle assembly, Ball valve assembly, overflow assembly, Syphon assembly, Outlet flange assembly and Flush pipe assembly, while arriving at the valuation of the flushing cisterns manufactured by the respondent. It is an admitted position that the aforesaid fittings are not manufactured by the assessee. It is also an admitted position that the assessee supplied the same to those buyers only who asked for that and in such a situation the assessee buys the aforesaid components from the market and supply to the buyers at their option. In these circumstances, the Tribunal has rightly declined to add the value of the aforesaid components which are not the part of flushing cistern manufactured by the assessee. Even otherwise, the amount of tax involved is not much. For these reasons we dismiss this appeal."
7. In view of the aforesaid pronouncement of the Apex Court, we are of the view that the impugned order is not sustainable and hence is set aside and appeal is allowed, with consequential relief, if any as per law.
(Operative part of the order pronounced
in court on 14.06.2017)
(V.Padmanabhan) (Sulekha Beevi C.S)
Member (Technical) Member (Judicial)
gs
2
Appeal No.E/640/2005