2015 (4) TMI 1131 - AT - Central Excise

Assessable value - manufacturing activity - whether activity of erection installation and commissioning of the equipment is a service and is post manufacturing activity and nothing to do with the manufacturing activity and therefore the charges recovered for the said activity will not form part of the assessable value? - Held that - We find that it is not disputed by the Revenue that the contract receipt is relating to erection installation and commissioning charges for the transformer and voltage stabilizer. The said erection installation and commissioning is done by the appellant in the customer s premises. Further the goods when cleared from the factory are ready to use and complete in all respects. Erection installation and commissioning in the present facts and circumstances of the case cannot be considered as part of the manufacturing activity of the goods and would therefore not form part of the assessable value of the goods. These activities are post manufacturing services. In view of the Hon ble Supreme Court s judgment in the case of Thermax Limited (1998 (4) TMI 134 - SUPREME COURT OF INDIA ) we allow the appeal in favour of assessee.

Summary

Issues:
- Whether charges for erection, installation, and commissioning of goods should be included in the assessable value of the goods for duty calculation.

Analysis:
1. The appellant, engaged in manufacturing transformers and voltage stabilizers, faced a demand notice from the Revenue for including charges for erection and commissioning in the assessable value of goods. The demand notice invoked an extended period of limitation from 1/7/2000 to 31/3/2002.

2. The appellant argued that charges for erection, installation, and commissioning are post-manufacturing activities and should not be considered part of the assessable value. They cited a Board Circular and a Supreme Court judgment (Thermax Limited Vs. CCE) to support their contention that such charges are not to be included in the value of goods for duty calculation.

3. The Revenue, represented by the Assistant Commissioner, maintained that the charges for erection and commissioning should be included in the assessable value of the goods, as per the findings of the original authority and the first appellate authority.

4. After considering the arguments, the Tribunal found that the activities of erection, installation, and commissioning were not part of the manufacturing process but were post-manufacturing services provided at the customer's premises. The goods were ready for use when cleared from the factory, and hence, these charges should not be included in the assessable value of the goods.

5. The Tribunal relied on the judgment of the Hon'ble Supreme Court in the case of Thermax Limited to support their decision and allowed the appeal, ruling in favor of the appellant.

This judgment clarifies that charges for post-manufacturing activities such as erection, installation, and commissioning should not be included in the assessable value of goods for duty calculation, as they are separate services provided after the manufacturing process is complete. The decision aligns with established legal principles and the interpretation of relevant circulars and judicial precedents.