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TMI Blog2015 (12) TMI 1151X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner. 3. Respondents are engaged in the manufacture of Digital Switching Systems and parts thereof classifiable under Heading No.85.17 of the Schedule to the Central Excise Tariff Act, 1985. Learned Authorised Representative for the Revenue, drew attention of the Bench to the relevant portion of the show cause notices. We find that there are three issues involved in the show cause notices, as under:- a) The assessee had cleared software loaded in the Digital Switching Systems from their factory premises to the sites of BSNL/MTNL, collectively valued at Rs. 31,79,01,546.00 during the period from 1st April 1998 to 31st May, 2000, without payment of duty amounting to Rs. 5,09,76,529.00 under the cover of non-excisable invoices. b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... items which were received by the Respondent are essential parts of the finished goods. 6. On the other hand, learned Counsel for the Respondent contested the demand of duty on merits as well as revenue neutrality. He submits that there is no dispute that the Respondents had not availed CENVAT Credit on the bought out items and the value of bought out items were not included in the assessable value. It is contended that if the value of the bought out items included in the assessable value, they were eligible to avail CENVAT Credit and the situation would be revenue neutrality. For the purpose of proper appreciation of the facts of the case, we reproduce below the relevant findings of the Adjudicating authority as under:- "25.1 I find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed second option during the period of dispute January, 1998 to May 2000 i.e. they neither claimed MODVAT Credit nor paid excise duty on accessories and before and after that period, Noticee were exercising the first option. I find that Noticee did not undertake any processing on these bought out items and therefore, they were not required to pay any excise duty on the clearance of bought out items. ........... 25.5 I also find that an identical controversy arose in the context of two other telephone exchange equipment manufacturers viz. M/s Ericsson India Pvt.Ltd. and M/s L.G. Electronics India Pvt.Ltd as to whether value of bought out items is to be included in the value of manufactured items or not. The Tribunal in the case of Ericsso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. On perusal of the grounds of appeal filed by Revenue, we find that the Revenue had not disputed findings of the Adjudicating authority on revenue neutrality. The Hon'ble Gujarat High Court in the case of CCE, Vadodara-II Vs Indeos ABS Ltd - 2010 (254) ELT 628 (Guj.) dismissed the Revenue's appeal, holding that since the goods were cleared to sister concern whatever duty payable and availed as credit to their own unit hence entire exercise would be revenue neutrality. It has further been observed that the Revenue's grievance is acceptable, if the ultimate exercise benefited the Revenue by collection of duty and in that case, no such benefit accrues to exchequer. The said decision was upheld by the Hon'ble Supreme Court as reported in 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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