2022 (12) TMI 1047 - AT - Central Excise

Valuation - non-inclusion of value of Bought Out items received at site and used in the Erection of Boilers have in the assessable value of the Boilers - contravention of provisions of Rule 4, Rule 5, Rule 6, and Rule 8 of the Central Excise Rules, 2002 - short paid excise duty - extended period of limitation - HELD THAT:- The finding of the Commissioner that all the systems received at the site of the erection of the Boiler, do not essentially constitute as essential parts of the boiler required for the erection and commissioning of the boiler. Certain parts as noted by the Hon’ble Apex Court will be in nature of auxiliaries etc., however they in view of the HSN explanatory note continue to be classified as Boiler under heading 8402.10 and not under the heading 8402.90.

Undisputedly the goods which have been cleared by the Appellants have to be assessed in the form in which they were cleared by the appellant. In the case of RELIANCE TEXTILE INDUSTRIES LTD. VERSUS UNION OF INDIA [1992 (3) TMI 86 - HIGH COURT OF JUDICATURE AT BOMBAY], Hon’ble High Court held It is not in dispute that when base yarn undergoes texturising process to bring into existence texturised yarn, then separate excise duty is leviable for the process of manufacture. In these circumstances, it is impossible to accede to the submission urged on behalf of the department that at the time of clearance of base yarn, the petitioners are liable to pay excise duty which is required to be paid after the texturised yarn comes into existence. The provisional assessment made by the department, therefore, is unsustainable.

Having held so we also find merits in the submission made by the appellant that the goods as per the turnkey contract entered by them emerged only at the site of customer which do not fall within the jurisdiction of the Pune Commissionerate. Accordingly the issues relating to excisablity and valuation of the goods as per the turnkey contract could not have been determined by the Commissioner Pune, having jurisdiction over the factory/ factories of the appellant.

From the reading of the order of the Hon’ble Apex Court in COMMISSIONER VERSUS SIEMENS LTD. [2003 (5) TMI 535 - SC ORDER]it is quite evident that Hon’ble Supreme Court has not recorded any finding in respect of the issue of the inclusion of the value of the brought out items in the value of the boiler. On the contrary Hon’ble Supreme Court has not taken up the issue for consideration as that question was not raised in the show cause notice which was the foundation for the entire proceedings. Hon’ble Supreme Court order cannot be said to declaration of law on the subject, when Supreme Court itself observes for the deletion of the para 10 and 11 (b) if the there is no demand made in respect of the brought out items in the show cause notice. Commissioner has in the impugned order not recorded any finding in this respect in the impugned order, as to whether any demand was made in the show cause notice in that case or not. Hence we do not find any merits in the sole reliance placed in the impugned order on the said decision of the tribunal and Hon’ble Supreme Court.

In the present case by the impugned order, revenue has not sought to add the value of the brought out items in the assessable value but has sought to add the some value which they have determined. Impugned order records that there is difference in value which has been shown by the appellant while raising the invoices on the customer and the value at which these brought out items had been invoiced by the supplier of the brought items. Further impugned order also has sought to add certain undetermined charges under the category of design and engineering head, in the garb of brought out items. The charge of undervaluation of the goods has been made even without reference to the supplier of these brought out items. If there was any undervaluation of these items then the demand of duty should have been made on the supplier of these brought out items. Admittedly and undisputedly these brought out items were not even brought into the premises of appellant - Undisputedly after erection of the goods manufactured and cleared by the appellant and other brought out items at the site of Customer, what emerges is a immovable property which as such is not excisable.

As we find that impugned orders cannot be sustained on grounds of jurisdiction and merits, we do not consider the other grounds urged by the appellant in appeals and during course of argument - there are no merits in the impugned orders so as to sustain them.

Appeal allowed.