TMI Blog1995 (1) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... wer supply system (UPS). On the plea that a contract for setting up of a UPS for a customer is a multifaceted and multi-activity contract involving various items, they claimed deduction on account of Engineering and design charges, documentation and technical charges, installation and commissioning charges, packing and forwarding charges, bought out items like battery charges etc. The concerned Assistant Collector held that in view of the judgment in the case of Bombay Tyre International, the commissioning, erection, packing charges, engineering, design charges are part of the assessable value as they are charged for manufacturing activities connected with the items manufactured by the party. It was also held by him that the batteries are the integral part of the mechanism of the equipment/system manufactured by the party and therefore, its value should be included. Shri A. Hidayatullah, learned Senior Advocate, appearing for the party in all these cases submitted that aggrieved by the respective orders either on merits or on raising the demands on the above issues were challenged by the party before the Collector (Appeals). He said that Order-in-Appeal No. SKM-1457/89-B 1, dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vations made in the respective impugned orders which are not favourable to the Department. 3. On going through the submissions made by both sides with reference to the facts, we find that following issues are to be considered in these appeals. 1. Whether installation and commissioning charges are to be included in the assessable value. 2. Whether UPS System becomes immovable property after installation and assembled at site or continues to be excisable goods chargeable to duty. 3. Whether cost of bought out items (Battery and other items) are to be excluded from the assessable value. 4. Whether demand was barred by time in appeal Nos. E/4087/90-A and E/4168/91-A. 4.1 INSTALLATION AND COMMISSIONING CHARGES. It was argued on behalf of the party that activity carried out by the party much after the removal of the `item manufactured from the factory of the party and it merely involves the setting up of the system at the premises of the customer. It was the contention of the Department that these charges are includible in the assessable value since it enriches the value of the item and item becomes functional after installation and commissioning. On hearing both sides on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, be regarded as `goods and, hence, excise duty cannot in law be levied on the same. He contended that the system constitutes immovable property and entire contract results in fixtures and they are, therefore, not `goods and are not liable to duty relying upon the decisions of the Tribunal and particularly emphasised para 6 of the Judgment in the case of Braithwaite Company Ltd. v. Collector of Central Excise, Calcutta [1987 (29) E.L.T. 251] and para 24 of the Judgment in the case of Aruna Industries, Visakhapatnam Others v. Collector of Central Excise, Guntur and Others, reported in 1986 (25) E.L.T. 580 (Tri.). He also drew our attention to the article published in Economic Times dated 12-12-1994, wherein it was said that Supreme Court held that erection and installation of a plant cannot be held to be excisable goods in the case of Quality Steel Tubes Pvt. Ltd. [1975 (75) E.L.T. 17 (S.C.)]. 4.3 While countering the arguments Shri B.K. Singh submitted that it is not correct to say that finding on this issue cannot be disturbed. It is the subject matter of dispute in all these appeals and the observations made on this issue in the impugned order with reference to insta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 346 and I.G.E.(India) Ltd. v. Collector of Central Excise - 1991 (53) E.L.T. 461, he said that by nature, if the property is movable and for its beneficial use or enjoyment it is necessary to fix it to earth though permanently, i.e., when it is in use, it is not immovable property and in the present case it can be dismantled and shifted to any other place. He also referred to the following decisions :- (a) Anil Ice Factory and Another v. Union of India - 1984 (15) E.L.T. 333; (b) Paharpur Cooling Towers Pvt. Ltd., Calcutta v. Collector of Central Excise, Calcutta - 1986 (24) E.L.T. 611; and (c) M/s. Nima Ltd. v. Collector of Central Excise, Baroda - 1989 (21) ECR-94, in support of his contention. On going through the submissions made by both sides on the issue of immovable property, concurring with the arguments advanced by the learned Departmental Representative relying upon the case law referred to by him, we are of the view that item in question is not an immovable property but `goods since it is specified in the Schedule and marketed as such and, therefore, they are excisable goods to attract duty. Accordingly, Department succeeds on this issue. 4.4. BOUGHT OUT ITEM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia) v. Collector - 1993 (67) E.L.T. 144 (c) Auto Controls v. Collector - 1993 (63) E.L.T. 156 (d) Bedi Bedi v. Collector - 1987 (32) E.L.T. 169 (e) Collector v. Indoprint Enterprises - 1988 (36) E.L.T. 513 (f) Kerala State Electronics Development Corp. v. Collector - 1994 (71) E.L.T. 508 (g) Tata Unisys v. Collector - 1994 (73) E.L.T. 96 (h) ORG Systems v. Collector - 1989 (40) E.L.T. 401 (Tri.) and the effect of the judgment of the Hon ble Supreme Court of India in the case of State of Uttar Pradesh v. Kores India Ltd., (AIR 1977 SC 172) i.e., function of an article has not been considered in the judgments which held that the value of the bought outs must be included in the assessable value except in Tata Unisys (supra) where the judgment is noted but its impact/ratio has not been applied or followed. He said that in view of the inconsistency on this issue, the matter may be referred to the Larger Bench to resolve the issue. He contended that more than essentiality whether bought out items were fitted or attached to the excisable goods at the time of clearance is the real criterion to decide the issue and this was precisely considered in the latest case of Uptron I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfactory level. After a battery has been charged it can again produce current. Stand-by generator is not substitute for UPS system, as the stand-by generator cannot take over the power supply automatically as is done by the UPS system of which battery is an integral part. The battery is inter-connected using metallic links and is connected to the UPS equipment by means of cables generally planted underground." It was concluded that by including the value of the component-battery - while assessing the assessable value of the UPS System, it is not the battery as such which is being charged to duty, but the UPS System of which the battery is an essential component. Since facts are identical and in view of clear findings on facts, the above decision is clearly applicable to the facts and, accordingly, value of the battery is to be included in the value of UPS System. He said that decision in the case of Kerala State Electronics Corporation rules the field and not Kores India (supra) referred to by the other side as it was under Sales Tax law. He said that contract was for the supply of UPS System including battery and, accordingly, duty is leviable on entire works contract. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he nature, characteristic and essentiality of the bought out items if they were supplied with the main item. But we do not find such conflicting decision on the issue with reference to optionality. Hence we do not find any justification to refer it to a larger Bench. We have taken the view in the case of Uptron India Ltd., that the value of bought out items is includible even if they are not essential for the operation of manufactured goods provided they are fitted or attached to the goods before clearance. If the parts or accessories are fitted at the option of the customer then they cannot be described as essential or integral parts of the products to which they are affixed or attached and their cost is not includible in the value of the main product unless there are special provisions in the relevant tariff entry. Although matter was remanded by giving a direction to examine whether they were essential or optional ones, but it was held to exclude the cost of bought out items if they were optional. Similarly, in the present case also it was contended before us that battery and other bought out items were supplied to customers on a purely optional basis according to their individu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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