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2015 (6) TMI 401 - CESTAT NEW DELHI

2015 (6) TMI 401 - CESTAT NEW DELHI - 2015 (329) E.L.T. 458 (Tri. - Del.) - Manufacture - digital local telephone exchange - Whether assembly, installation and commissioning of switching system along with power plant, inverter etc. would amount to manufacture - Held that:- Appellant have purchased the switching equipment and other integral essential parts of the system such as power plant required for producing 48V DC power on which the system is operated, inverters for power break down etc., an .....

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component of a telephone exchange is switching system which is an electrical apparatus for line telephony. The power plant and inverter are only auxiliary equipments. Power plant supplies the 48V DC current for functioning the switching system and inverter is required for standby period in case of power break down. Thus, the goods which have been purchased - Switching systems have remained the switching systems only even after installation and in our view no new commodity with distinct commercia .....

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t, it is clear that the switching systems are commonly called telephone exchanges and hence, on installation of a switching system, no new goods with distinct commercial identity and distinct characteristics or uses have emerged. The impugned orders, therefore, are not sustainable. - The same are set aside - Decided in favour of assessee. - Excise Misc Application Nos. E/Misc/493-494/2010, E/2199/2006-Ex[DB], E/Misc/540-541/2010, E/Misc/50641/2015, Excise Appeal No. E/2200/2006-Ex[DB], E/Misc/52 .....

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, they purchased switching equipments and other essential parts of the system such as power plant required for producing 48V DC power, inverters,etc, and assembled and installed the same at various places to set up telephone exchanges. The Department was of the view that this activity of the appellant would amount to manufacture and accordingly, the appellant would be required to pay duty on the telephone exchanges which have come into existence. According to the Department, by this activity of .....

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.2000 to 31.12.2004. b) SCN dated 02.08.2005 for demand of duty amounting to ₹ 89,86,819/- for the period from 01.04.2000 to 31.12.2004 along with interest on it under section 11AB. c) SCN dated 05.10.2006 for demand of duty amounting to ₹ 17,64,968/- from the period from 01.04.2004 to 31.10.2005 along with interest on in under section 11AB. d) SCN dated 09.06.2006 for demand of duty amounting to ₹ 1,26,26,440/- for the period from 25.07.2001 to 31.03.2005 along with interest o .....

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al amount were imposed under section 11AC. Against the above order of the Commissioner, these appeals have been filed. 2. Heard both the sides. 3. Sh. Sameer Agarwal, Advocate, the Ld. Counsel for the appellant pleaded that the appellant purchased switching equipments, power supply, inverter etc., from various suppliers, that the heart of the telephone exchange is switching system, that by installing the switching system along with power plant and inverter does not bring into existence any new c .....

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onic components that connects the telephone calls and the Central office is the physical building used to house the telecom equipment including telecom houses', that the goods purchased by the appellant are, thus, telephone exchange and the appellant's activity is only of installing and commissioning the same and hence, the same cannot be treated as manufacture, that in the invoices of the suppliers - Punjab Communications Ltd., the goods purchased by the appellant are described as " .....

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e goods purchased by the appellant are the electrical apparatus for line telephony/ line telegraphy and the same after installation have remained the same, that in any case the extended limitation period under proviso to section 11A(1) is not invokable as the appellant are a PSU and there was no incentive for them to evade the duty by deliberately suppressing any material facts from the assessing officers, that though the part of the duty demand is for the period 01.04.2000 to 31.03.2001, BSNL h .....

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itching system, that mere up-gradation of a machine cannot be treated as manufacture and in this regard he relied upon the judgment of the Tribunal in the case of CCE Delhi-II vs Usha India Ltd. reported in 2000 (122) ELT 870 Trib., and that in view of the above submissions the impugned order is not sustainable. 3.1 Sh. Agarwal also cited the judgment of the Tribunal in the cases of Collector of C. Ex. Bhubaneswar vs Radiant Electronics Ltd. reported in 1996 (85) ELT 102 (Tribunal), Fujitsu Indi .....

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lephone exchange including the value of bought out items. In the case of CCE Bhubaneswar vs Radiant Electronics(supra), the Tribunal held that installation and erection of EPABX (Private Telephone Exchange) is not an activity amounting to manufacture of 'excisable goods'. In case of BPL Mobile Communications Ltd. vs CCE (supra), the Tribunal held that assembly and installation at site of various equipments like towers, microwave, antenna, air-conditioners, battery back-up, which had indi .....

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amount to manufacture. He also relied upon the board's circular no. 154/26/99-Cx-IV dated 15.01.2002 according to which for goods manufactured at the site to be dutiable, they should have a new identity character and use, distinct from inputs/ components that have gone into their production and further, such resultant goods should be specified in the central excise tariff as excisable goods besides being marketable and the goods should not be immovable, that the goods in this case cannot be .....

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line systems', that as per the HSN explanatory notes, the term 'electrical apparatus for line telephone or line telegraphy' means apparatus for transmission between two points of speech or other sounds by variation of electric current or of an optical, wave flowing in a metallic or dialectic circuit connecting a the transmitting station to the receiving station, that the goods assembled and installed at site answer to this description of heading 8517, that the appellant under their l .....

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rrectly invoked in proviso to section 11A(1) as the appellant has not disclosed their activity to the Department, and that in view of the above submissions, there is no infirmity in the impugned order. 5. Sh. Sameer Agarwal, the Ld. Counsel for the appellant, in rejoinder, pleaded that the judgment of the Calcutta Bench in the appellant own case reported in 2013 (292) ELT 353 (Tri. Kol) has been set aside by the Hon'ble Calcutta High Court vide its judgment dated 12.03,2014 in respect of the .....

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ant required for producing 48V DC power on which the system is operated, inverters for power break down etc., and assembled these equipments by their own staff at site into a digital local telephone exchange. As stated by Sh. HC Singla, an officer of the appellant company, the telephone exchanges can be shifted from one place to another place, It is in view of the above facts that the Department has alleged that the assembly, installation and commissioning of the switching equipments, power supp .....

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ith cordless handsets and telecommunication apparatus for current carrier line systems or for digital line systems; video phones". There is no dispute that the appellant have purchased switching systems. The point of dispute is as to whether assembly, installation and commissioning of switching system along with power plant, inverter etc. would amount to manufacture. In our view the main component of a telephone exchange is switching system which is an electrical apparatus for line telephon .....

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