Customs, Excise and Gold Tribunal - Delhi
M/S. Bharat Heavy Electricals Ltd. vs Cce, Meerut on 26 April, 2001
Equivalent citations: 2001(75)ECC845, 2001(133)ELT584(TRI-DEL)
ORDER
C.N.B. Nair
1. They duty demand in the present appeal consists of two parts. Demand of about Rs.35 Lakhs is in respect of certain goods bought by the appellants from the market and supplied to the project. Remaining demand of about Rs.12 Lakhs is in respect of notional interest on advances.
2. When the matter was taken up for arguments today, Learned Representative of the appellants submitted that M/s. BHEL is a leading manufacturer of electric power supply equipment. The duty demand in the present case relates to their order for supply of certain equipments to M/s. Tata Hydroelectric Power Supply Co. for installation of a Combined Cycle Power Plant at Trombay. He explained that the total contract was for about Rs.28 Crores. Out of this, goods valued around Rs.16 Crores were manufactured by the appellants in their factory at Hardwar and supplied to M/s. Tata Hydroelectric Power Supply Co. at Trombay. They had paid duty on such goods manufactured by them. In terms of the contract, the appellants also procured from other manufacturers certain goods required for the project and supplied them directly for use at Trombay in the erection of the power project. Those goods were not even brought to the appellants factory. Learned Counsel for the appellant submitted that there could be no duty demand in respect of the items procured from the market and supplied directly by the appellants to the Plant Power, inasmuch as they had not undertaken any manufacturing activity in respect of those bought out items. Nor had they used the bought out goods in the manufacture of any new products. With regard to the duty demand on account of notional interest on advances, the Counsel explained that the supplies in the present case were in regard to power project and in terms of the contract, the buyer was to make payment at various stages of supply. The final payment being due only after the project was completed. He submitted that no deduction in the price of the goods supplied had been made on account of payment at various stages of supply. The Revenue had also not made out a case that prices of the dutiable goods manufactured by the appellants had been reduced on account of payment in instalments. He, therefore, submitted that there is no justification for a demand on this score also. Learned Counsel also submitted that the issues involved in this case remain covered in favour of the appellant vide Tribunal's Final Order No.932-949/2000-A in Appeal Nos.E/578-595/2000-A in appellants own case.
3. As against the aforesaid submission on behalf of the appellants, Learned Departmental Representative submitted that the demand in the present case is justified inasmuch as the bought out items constituted identifiable parts of electricity generator machinery and that the payment for the goods were being received in advance of the supply.
4. A perusal of the record makes it clear that the duty demand was in respect of certain items procured by the appellant from the market and supplied directly to power project in terms of the contract. There could be no duty liability on the appellant with regard to such goods, as the appellants were not the manufacturer of such goods. They had also not utilised those items in the manufacture of any new excisable products. In these circumstances, we fund no justification for the duty demand of about Rs.35 Lakhs in respect of bought out goods. Demand of duty on account of advance payment also was not justified in the present case, inasmuch as there is no case made out that the appellant has supplied any manufactured goods to their buyer at a reduced price, in consideration of advance payment. In fact, all the supplies in the present case were in terms of a contract for about Rs.28 Crores. Out of the above, only part of the goods were manufactured by the appellant. Terms of payment had stipulated percentages of payment due at various stages of the contract. In these circumstances allegation cannot be made that goods supplied were at lesser value than their normal value. Accordingly, this demand also has to fail.
4. In view of the findings above,the appeal is allowed with consequential relief, if any, to the appellants and the impugned order is set aside.
5. Appellant has made a deposit of Rs.9.5 Lakhs in terms of Commissioner's stay order. In view of the setting aside of the duty demand, this pre-deposit shall be returned to the appellant immediately.