2004 (6) TMI 470 - AT - Central Excise

Summary

Issues:
1. Whether the value of bought-out items such as CID joints is to be added to the supplies of rubber rings, nuts, and bolts.
2. Whether the rubber rings, bolts, and nuts are essential parts of CID joints and should be included in the assessable value of the goods.

Analysis:
1. The appeal was against the Order-in-Appeal passed in the Department's appeal before the Commissioner, questioning whether the value of bought-out items like CID joints should be added to the supplies of rubber rings, nuts, and bolts. The Commissioner found that the bought-out items were not integral parts of CID joints, as they were used in joining AC pipes in water supply schemes. The Commissioner referenced previous Tribunal judgments to support the decision that the value of bought-out articles supplied along with own manufactured goods should not be included in the assessable value of manufactured goods. The Commissioner noted that the items were supplied on specific demands of customers and were not required to be fitted to the joints before removal from the factory, upholding the Order-in-Original in favor of the assessee.

2. The Revenue contended that the rubber rings, bolts, and nuts are essential parts of CID joints and should be included in the assessable value of the goods. It was argued that these parts prevent leakage of fluids passing through connected pipelines and that the joints become incomplete without them. The Revenue relied on a Tribunal judgment to support their position. However, upon careful consideration, the Tribunal found that the bought-out items were not essential parts of the goods, as they were supplied based on customer requests to fulfill contractual obligations. Both authorities had examined this question of fact and concluded that the bought-out items did not enrich the value of the goods. Therefore, the Tribunal rejected the Revenue's appeal, as there was no evidence to suggest that the bought-out items were essential parts that should be included in the assessable value.