TMI Blog2022 (12) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Excise Appeal No. 89005 of 2018 - FINAL ORDER NO. A/86190-86193/2022 - Dated:- 12-12-2022 - MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) AND DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL) Shri V. Sridharan, Senior Advocate, with Shri Rajesh Ostwal and Shri Saurabh Bhise, Advocates, for the Appellant Shri C. Dhanasekaran, Special Counsel, for the Respondent ORDER These appeals are directed against order in originals as indicated in table below, of the Commissioner Central Excise Pune. Appeal no Period SCN Division E/85478/16 PUN-EXCUS001-PR.COM013 TO 04015-16 Dated 30.11.2015 July 2000 to March 2015 28 Boiler Heating Division E/85593/17 PUN-EXCUS001-PR.COM036-16-17 Dated 30.11.2016 April 2015 to Sep 2015 1 -do- E/89005/18 PUN-EXCUS001-COM-00318- 19 Dated 30.05.2018 October to March 2017 Statement of Demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uffice for the duty demanded therein. The goods totally valued Rs. 69,24,78,22,485/- on which due duty has not been discharged, is liable for confiscation under the provisions of Rule 25 of Central Excise Rules (no.2)Rules 2001/Rules, 2002 but for its non-availability for the same. 33.03 I hold that the Erection Commissioning Charges cannot be treated as part of assessable value chargeable to Central Excise duty as it is a settled Law. Accordingly, I drop the total duty demand of Rs. 7,49,22,418/- (Rupees Seven Crores Forty None Lakhs Twenty Two Thousand Four Hundred and Eighteen only) i.e. Rs. 3,55,11,682/- + Rs. 3,94,10,736/- demands made against M/s Thermax Babcock Wilcox Ltd., Chinchwad (Now merged known as M/s. TL) M/s Thermax Ltd., Chinchwad respectively against the total Erection Commissioning value of Rs.46,36,43,378/- recovered by them considered for duty calculations in 13 SCNS issued during the period from July, 2000 to September, 2005, as detailed in Para 16, Para 31 of this Notice. 33.04 I confirm the total duty demanded in the First two SCNS issued for the period July, 2000 to March, 2004 amounting of Rs. 88,84,72,174/- (Rupees;- Eighty Eight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f erstwhile CER, 1944/ Rule 25 of Central Excise (2) Rules 2001/ Rules 2002 read with Section 11AC of the Central Excise Act, 1944 with respect to demand confirmed vide Para 33.04 above. 33.09 I impose a penalty of Rs. 7,00,00,000/- (Rupees Seven Crores only) on M/s Thermax Babcock Wilcox Ltd., (Now Known as M/s Thermax Ltd.), Chinchwad, Pune- under the provisions of Rule 25 of Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944, with respect to demand confirmed vide Para 33.05 above. 33.10 I also impose a penalty of Rs.150,00,00,000/- (Rupees One Hundred and Fifty Crores only) on M/s Thermax Ltd., Plot No.13, D-1 MIDC, Industrial Area, Chinchwad, Pune-411019 under the provisions of Rule 25 of Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944, with respect to demand confirmed vide Para 33.05 above. 33.11 I also give an option to the Noticee, under the second proviso to Section 11AC of the Finance Act, 1994, to pay penalty equivalent to 25% of the amount as determined/ confirmed, in para 33.07, 33.08, 33.09 33.10 above, provided they pay the entire amount as determined/ confirmed, in para 33.04 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod October 2006 to September 2012, as detailed in Para 27.1 above, against total value of Bought Out items recovered from customers amounting to Rs. 6,03,29,74,305/- but not included in assessable value of Pollution Control Equipment supplied under turnkey Contracts and order recovery of the said confirmed duty demand of Rs. 73,30,78,952/- (Rupees Seventy Three Crores Thirty Lakhs Seventy Eight Thousand Nine Hundred Fifty Two only) from the Noticee, under the provisions of Section 11A(2)/11A(10) of the Central Excise Act, as the case may be. (iv) I confirm the demand of interest and order recovery of the same at applicable rate(s) from the Noticee, on the duty demand confirmed at Sr. No. (iii) above, under the provisions of Section 11AA/11AB of the Central Excise Act, 1944 as the case may be. (v) I impose a penalty of Rs. 73,30,78,952/- (Rupees Seventy Three Crores Thirty Lakhs Seventy Eight Thousand Nine Hundred Fifty Two only) upon the Noticee i.e. M/s. Thermax Ltd., Enviro Division, Gat No. 183/3, Waki Village, Chakan, Taluka: Rajgurunagar, District: Pune, under the provisions of Rule 25 (1)(d) of the Central Excise Rules, 2002 read with provisions of Section 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest and order recovery of the same from the Noticee, under the provisions of Section 11AA of the Central Excise Act, 1944 in respect of the amount as confirmed in Sub-Para (ii) above. (iv) I also impose a penalty Rs.6,12,70,523/- ( Rupees Six Crores, Twelve Lacs, Seventy Thousand, Five Hundred and Twenty Three Only) on M/s Thermax Ltd. Plot No. D-13, MIDC, Industrial Area, Chinchwad, Pune-411019 under the provisions of Rule 25(1) (d) of Central Excise Rules 2002 read with Section 11 AC (1) (a) of the Central Excise Act, 1944 (v) I further give an option under the provisions of Section 11AC (1) (b) of the CEA, 1944 to the Noticee to avail off the reduced penalty @ 25% of the penalty imposed vide (iv) above by way of paying the duty confirmed vide (ii) above, interest liability thereon confirmed vide (iii) above and such the reduced penalty within 30 days of the date of communication of this order. 28.00 This order is issued without prejudice to any other action that may be taken against the Noticee under the provisions of the Central Excise Act, 1944/Service Tax provisions and / or the rules made there under and / or any other law for the time being in fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1985). 2.3 Appellant cleared excisable goods viz. Boilers, falling under Chapter No.84 of the CETA, 1985, in CKD condition as per the Contract value, executed between the Noticees and the buyer. As per the said Contract, value of the goods include the costs of drawing and designing, manufacture up-to their Installation and Commissioning and also the costs of its essential spares, bought out items/parts. As such, the sale/transaction is completed only after successful Commissioning of Boilers. 2.4 On scrutiny of the records for the period from July 2000 to March 2015, it was observed that appellant executed various composite Contracts for sale of the above said excisable goods, which include Erection Commissioning of the Boilers, at customer's site. In process appellants not only supplied their own manufactured goods in CKD condition on which they paid Central Excise duty, but also procured various essential spares, bought out items / parts from various suppliers /vendor manufacturers. Without the procurement of the above said spares, bought out items/ parts, the entire Erection/Installation/Commissioning of the Boilers is incomplete. The sale of goods are compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Boilers . 2.9 Hon'ble Supreme Court vide its Order dated 08-05-2015 arising out of the above mentioned CESTAT's Order dated 14-012005 has decreed that if there is no demand of duty in respect of bought-out items in the relevant Show Cause Notices the direction contained in para-10 and 11(b) of the impugned order of the Tribunal to the jurisdictional officer, to determine and recover the duty from the appellant shall have to go. However, it is only if the officer is satisfied that no demand was made in respect of aforesaid items while computing the demand. It therefore implies that the Hon'ble Supreme Court vide the above referred Order has not decreed that the value of the bought-out items is not to be included in the assessable value of the Boilers for payment of duty. 2.10 Thus appellant contravened the provisions of Rule 4, Rule 5, Rule 6, and Rule 8 of the Central Excise Rules, 2002, inasmuch as they failed to include, the value of essential spares/bought out items/parts, supplied directly at various sites for Erection of excisable goods i.e. Boilers, in the transaction value of Boilers manufactured and supplied by them, during the period from July 2000 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21.04.2010 April 2008 to Sept 2008 60,56,55,000/- 22.09.2009 Oct 2008 to March 2009 61,32,39,153/- 23.02.2010 April 2009 to Sept 2009 19,99,56,613/- 16.09.2010 Oct 2009 to March 2010 29,17,08,019/- 09.03.2011 April 2010 to Sept 2010 35,38,61,665/- 24.10.2011 Oct 2010 to March 2011 36,75,70,858/- 19.01.2012 April 2011 to Sept 2011 36,31,85,452/- 31.05.2012 Oct 2011 to March 2012 45,54,80,386/- 05.04.2013 April 2012 to Sept 2012 30,58,77,855/- 17.10.2013 Oct 2012 to March 2013 23,45,39,505/- 01.05.2014 April 2013 to Sept 2013 15,41,90,646/- 30.10.2014 Oct 2013 to March 2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the relevant period; (ii) Central Excise duty totally amounting to Rs.878,26,68,076/- (Rupees Eight Hundred Seventy Eight Crores, Twenty Six Lakhs, Sixty Eight Thousand, Seventy Six Only), short-paid by them on the said value of spares/essential bought out /parts and charges of Erection Commissioning should not be demanded and recovered from them, under Section 11A(1)/11A (1) (a) of the Central Excise Act, 1944 as applicable during the relevant period; (iii) Interest should not be demanded and recovered from them, on the amount of duty short-paid by the Noticees, as demanded in para (ii) above, as specified under Section 11AB/11AA of the Central Excise Act, 1944 as applicable during the relevant period; (iv) Penalty should not be imposed upon them under Rule 173Q/25/25 (1)(d) of erstwhile Central Excise Rules, 1944,the Central Excise (No.2) Central Excise Rules, 2001/ 2002, as applicable during the relevant period. 2.14 These show cause notices have been adjudicated by the impugned orders. Aggrieved appellant have filed these appeals. 3.1 We have heard Shri V Sridharan, Senior Advocate along with Shri Rajesh Ostwal and Shri Saurabh Bhise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rises 2014 (314) ELT 301 (T.) Pursuant to Order passed by Supreme Court, portion of Tribunal s Order relating to valuation was set aside. In any case, Revenue cannot place reliance on the Tribunal s Order without adjudicating original 3 SCNs remanded by the Supreme Court. Revenue in the original 3 SCNs did not include value of bought out items while computing demand. Predominantly, decisions have taken a view that value of bought out items is not includible. S S Engineer 2019-TIOL-1124-CESTAT-MUM Thermal Systems Pvt. Ltd. 2019 (3) TMI 787-CESTAT HYDERABAD Cheema Boilers Ltd. Vs. CCE 2018 (362) ELT 268 (T.) Fuse Base Eltoro Ltd. 2000 (116) ELT 279 (T.) Radiant Electronics Ltd. 1996 (85) ELT 102 (T.) Statfield Systems (Coating) Pvt. Ltd. 1996 (87) ELT 510 (T.) Eicher Tractors 2001 (127) ELT 846 (T.) Cimmco Birla Ltd. 2003 (156) ELT 1019 (T.) Goetze (India) Ltd. 2004 (169) ELT 274 (T.) Milestone Aluminium Co. Pvt. Ltd. 2007 (214) ELT 417 (T.) Kerala State Electronic Dev. Corpn. 2008 (224) ELT 88 (T.) Greysham Co. Vs. CCE 2014 (304) ELT 129 (T.) Brew Force Machines Pvt. Ltd. 2016 (333) ELT 468 (T ) Hone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For first two show cause notices dated 7.4.2005, suppression of facts with intent to evade payment of duty cannot be alleged on part of the appellants. Imposition of penalty is incorrect. 3.3 Arguing for the revenue learned special counsel while reiterating the findings recorded in the impugned order submits that- The common issue in these 4 Appeals is whether the value of bought-out items received at the site and used in the erection of boilers are liable to be added to the assessable value of boilers under the Central Excise Act. Issue has been decided by CESTAT's (2005 (182) ELT 336 (T) in their own case, which was affirmed by the Hon'ble Supreme Court of India (2015 (320 ELT 32 S.C). Revenue established that the brought-out items are essential for the Erection and Commissioning of the boiler in terms of the turnkey contract. Moreover, the turnkey contract does not specify any bought-out items. It only indicates the specification of the boiler to be designed and manufactured. The entire responsibility of designing. Manufacture, supply. erection, installations and commissioning are solely cast on the appellant. The vendor's manufacturers are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... boiler at the site of the customer and without which the boiler cannot be commissioned and hence cannot be functional. The case of the revenue is not centred on the status of the emergent product on the eve of postinstallation and the erection at the site of the customer. The case of the revenue is based on the excisable status of goods manufactured and cleared to the site of erection under the terms and conditions of the turnkey contract agreed upon with the customer. Therefore the above view expressed by the appellant has no relevance and application in the subject matter. It is settled law that. Design and drawing charges incurred in manufacturing should be included in the accessible value of the finished goods for discharging the Central Excise duty payable thereon, It is revealed in most of the contract the appellant have not recovered the design and drawing charges separately from the customers to whom they have manufactured and supplied with the boiler. However, in the subject case, every contract executed by the appellant has the scope of supply which includes design, manufacture, supply, installation, erection and successful Commission of Boilers .Therefore, the overal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y under Rule 25(1)(d) of Central Excise Rules, 2002 read with Section 11 AC of CEA,1944. Reliance is placed on the following decisions: Thermax Bobcock Wilcox Ltd. - 2005 (182) ELT 336 (T) Thermax Bobcock Wilcox Ltd. 2015 (320) ELT 32 (S.C) Baroda Machinery Manufacturer 1997 (91) ELT 88 (T) Star Industrial Textile Enterprises Ltd. 2003 (156) ELT 418 (T) Lipi Boilers Industries Ltd. 2011 (263) ELT 271 (T) Thermax Ltd. 2016 (337) ELT 456 (Tri. - Mumbai) Air Control Chem. Engg. Co. I td. 1996 (88) ELT 718 (T) Mittal Engg. Works 2001 (136) ELT 311 (Tri. - Del) Sirpur Paper Mills Ltd. 1998 (97) ELT 3 (S.C.) Walchandnagar Industries Ltd. 2014 (311) ELT 274 (Tri. - Mumbai) MEK Slotted Angles (India) Ltd. 2004 (178) ELT 948 (Tri. Mumbai) 4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments. 4.2 In relevant paragraphs of the impugned order dated 30.11.2015 are reproduced as below: 17.00 IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE RELEVANCY OF FINAL STTLEMENT OF CLASSIFICATION DISPUTE BY THE APEX COURT CLASSIFYING BOILERS' MANUFACTURED AT FACT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other apparatus of accumulation etc. are auxiliary item supplied along with the Boilers These auxiliary item increase or regulate the output of a Boiler or its efficiency. But the expert, whose opinion the Commissioner took into consideration, opines that economizer, super heater and heat recovery unit are essential parts of a Boiler. This opinion therefore is at variance to that extent with what is stated in the explanatory note referred to above. But we still hold that this variance in opinions expressed, does not alter the fact that the parts of Boilers as cleared by the respondents, do constitute an incomplete Boiler in an unassembled form. The facts as come out clearly indicate that the essential parts of Boilers are cleared from the factory as it is not possible to clear a complete Boiler in one go. Even when one considers that some of the parts removed from the factory are of auxiliary nature, one has to agree that an incomplete Boiler in unassembled form is cleared. That the Boiler in unassembled form is removed in several lots on different dates itself does not mean that parts but not the whole are cleared from the factory in view of the fact that the respondent has a Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bought out items are mere accessories of the Boilers/other equipment and are not required to make the Boiler/other equipment functional, the value of the said bought out items cannot be included in the assessable value of the Boilers/other equipment. Reliance is also placed on the following judicial precedents wherein it has been held by the courts that the value bought out items which are directly sent to the site and which are not essential integral parts of the goods manufactured by the manufacturer cannot be included in the assessable value of the goods manufactured and cleared by the manufacturer:-viz, Shriram Bearings Ltd. v. CCE (1997 (91) ELT 255] CCE Acer India Limited, 2004 [(172) ELT 289 (SC)]. BHEL v. CCE (2000 (119) ELT 578 (T)} CCE, Trichy v. M/s Neycer India Ltd. [2015-TIOL-115-SCCX] Kerala State Electronic Dev. Corpn. v. C.C., Trivandrum (2008 (224) E.L.T. 88 (Tri. - Bang)] Supercold Refrigeration Systems P Ltd v. CCE (2005 (191) ELT 379 (T) (approved by Hon'ble Supreme Court in 2006 (193) ELT A34) CCE v. A.Z. Electronics [2001 (134) ELT 689 (T) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tomer and' is reproduced below: Sr. No. Description of Items Function 1 Fabricated steel structural namely columns, beams, supports, Fuel Bunker, Fuel Silos, Fuel tanks, Canopy, Gangway, pipe rack. Considering height and heavy weight of Boiler, these structural are required for mounting Boilers on fabricated platform supported by beams, columns etc. Ladders, railings and staircases are required for movement of technicians. 2 Ducting Required to carry air gases towards furnace and emit unwanted portion to ESP chimney. 3 Chimney Required to emit burned gases at required height. 4 Industrial Fans To supply the air required for combustion, and emit unwanted portion to ESP Chimney. 5 Pollution Control System (ESP) To control air pollution from flue gases coming out of Boiler. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and control stem pressure temperature so as to operate Boilers safely and to avoid accidental explosions and ensuring industrial safety. As evident from a representative sample of P.O./turnkey Contract say, the Noticee was awarded with a contract of Design, Manufacture, Supply, Install, Erect and Commission of 22 TPH steam generator, it would arrange to manufacture Boiler as per Design and specifications of the turnkey Contract and supply all essential parts in CKD condition to the Boiler assembly site, some from its own factory and others from vendors factory and undertake the Installation and Erection work as agreed upon. After completion of Installation Erection of Boiler the Noticee would operationalize the Boiler and show to the customer steam generation from it @ 22 Metric Ton of Steam per Hour consistently at the desired pressure as specified in the turnkey Contract agreed upon with its customer and from this date of successful Commissioning it gives the Performance Gurantee of the Boiler for 12 Months .Only after satisfactory operation of Boiler throughout the Guarantee period the customer would release 10% of Retention Money kept for the purpose as last payment toward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... listed judgments relied upon by the Noticee are clearly distinguished and not applicable to the facts and circumstances of the present case and hence they need not be discussed further. 19.00 WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE NOTICEE'S CLAIM THAT IT IS ALREADY SETTLED THAT THE VALUE OF BOUGHT ITEMS DIRECTLY CLEARED TO THE CUSTOMER'S PREMISES FOR THE ERECTION, COMMISSIONING INSTALLATION OF HEAT PUMP IS NOT INCLUDIBLE IN THE ASSESSABLE VALUE OF HEAT PUMP MANUFACTURED AND CLEARED BY THE NOTICEE, THEREFORE, THE PROCEEDINGS ARE HIT BY RES JUDICATA, IS CORRECT OR OTHERWISE 19.01 It is submitted by the Noticee that the issue whether the value of bought out items cleared directly to the customer's site for Erection, Commissioning Installation of Heat pump is clearly settled in the Noticee's own cases as the Revenue has accepted the decision of Commissioner (A) and has not contended the same before the higher authorities. Therefore, the Department cannot now allege that the value of bought out items is to be included in the assessable value of the Heat pump as the said proceedings are hit by the principle of res judicata. Thus, it is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal was only against the classification of heat pump inclusion of value of lithium bromide in the assessable value of Heat Pump. The Hon'ble Tribunal vide Final Order No. A/3537/09/EB/C-II dated 22.01.2009 held that the value of the bought out items (Lithium Bromide) is not includible in the value of the complete machine and the goods cleared from the factory of the Noticee are not parts of air-conditioning refrigerator equipment but complete air-conditioning refrigerator equipment. 19.05 It is submitted that the Noticee has already filed an appeal before the Supreme Court against the portion of the said order of the CESTAT which is against the Noticee whereby the Tribunal has held that the product in dispute is a refrigerating equipment and not the heat pump. However the issue stands settled that the equipment so cleared by the Noticee is complete in itself and not part of any machine. 19.06 With this back ground the Noticee claims that the issue with respect to inclusion of value of bought out items in the assessable value of Heat pumps cleared from the factory is settled in favour of the them as the Revenue has not contended the same before the hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E. Merck (India) Pvt. Ltd. v. CCE - [1983 ECR 662] Indian Oil Corporation Ltd. v. CCE-[1987 (27) ELT 482 (T)], Sidhartha Tubes Ltd. v. CCE - [2000 (115) ELT 32 (SC)] Union of India v. J.G. Glass Indus. Ltd. [1998 (97) ELT 5 (SC)] 20.02 It is the case of the Revenue that the Bought Out Goods cleared to assembly site through vendors to be included in the assessable value of Boiler supplied to customers under the terms and conditions of turnkey Contracts agreed upon with its customers. Accordingly Boiler parts cleared in CKD condition from their own factory are rightly assessed to duty as incomplete Boiler in unassembled form. Similarly vendors of the Noticee while clearing the manufactured goods to Boiler assembly site of Noticee's customers have also paid duty as applicable classifying the same under respective headings of individual goods but not as incomplete Boiler in unassembled CKD condition. However, it is noted that these Bought Out items are the Goods required to complement the incomplete Boilers manufactured at the factory of the Noticees and are got manufactured by the Noticees from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demands to safe guard Government Revenue from deliberate attempt of under valuation of assessable value for evading/avoiding payment of due duty by the Noticee through the novel modus operandi of duty evasion Accordingly the above mentioned case laws sited by the Noticee are distinguishable from the facts of the present cases. 21.00 WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE IS IT RELEVANT THAT THE ACTIVITY OF ERECTION AND COMMISSIONING UNDERTAKEN AT THE CUSTOMER'S SITE AMOUNT TO MANUFACTURE UNDER THE CENTRAL EXCISE LAWS OR OTHERWISE. 21.01 It is stated by the Noticee that Central Excise duty under the Excise Laws can be charged only if an activity amounts to manufacturing under the provisions of the Central Excise Act and in present case, the activity of Erection Commissioning undertaken at the customer's site does not amount to manufacture under the Excise Laws. It is submitted by the Noticee that the excise duty under the CEA, 1944 is a duty on manufacture therefore in order to impose duty of excise the incident of manufacture must have taken place. The Noticee submits that it enters into a turnkey Contract for manufacture, Erection Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able goods i.e. Boilers, in the transaction value of Boilers manufactured and supplied by them, during the period from July 2000 to March, 2015 as required under Section 4(1)(b)/4(1)(a) of the CEA, 1944 read with Rule 6 of the Valuation Rules, 2000 and failed to pay appropriate duty on the same. The Revenue has not sought to demand and recover duty on the Boiler which comes in to existence at the customer's site. Whereas it has sought to demand and recover duty on the Boiler which is manufactured and cleared in CKD condition as per the terms and conditions of turnkey Contract agreed upon with its customers. The Notice have paid duty on those parts of Boilers manufactured and cleared in CKD condition from their own factory. But they deliberately avoided payment of duty on the other parts of Boilers got manufactured at vendor's end as per the Boiler design approved and agreed to supply under turnkey Contract with the customer, without these parts Boiler cannot be Commissioned. Further in all the subject cases of the Noticces turkey Contracts agreed upon with customers are composite Contracts and the SCOPE OF SUPPLY includes complete design, Engineering, Manufacture and Supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In other words, even if the activity has amounted to manufacture but if the goods have emerged in an immovable condition, no excise duty can be charged on the same. The Noticee supported their claim by citing the judgment of the Supreme Court in the case of Triveni Engineering Works. Hon'ble Supreme Court in the case of Triveni Engineering Industries Vs. CCE -[ 2000 (120) ELT 273 (SC)] has held as under; 14. There can be no doubt that if an article is an immovable property, it cannot be termed as excisable goods for purposes of the Act. From a combined reading of the definition of 'immovable property' in Section 3 of the Transfer of Property Act, Section 3(25) of the General Clauses Act, it is evident that in an immovable property there is neither mobility nor marketability as understood in the Excise Law...... It is also submitted by the Noticee that this position of law as laid down by Hon'ble Supreme Court has also been accepted by the CBEC Circular dated 15.01.2002. Therefore, if an item has emerged in an immovable condition and the same can be removed only after dis-assembling it into various components, no excise duty can be charged on such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Noticee. In view of these facts and circumstances of the case the contention of the Noticee is not tenable and accordingly the judgments cited and Board's Circular referred etc become distinguished and hence are not in support of Noticee's contention. 23.00 WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE DECISION OF CESTAT IN THE CASE OF CCE VS. SANMAR WEIGHING SYSTEMS LTD.-[2005 (190) ELT 228 (T)] APPLIES TO THE PRESENT CASE. 23.01 The Noticee placed reliance on the decision of the CESTAT in the case of CCE Vs. Sanmar Weighing Systems Ltd. [2005 (190) ELT 228 (T)]. In that case, Sanmar Weighing Systems Ltd. had entered into Contract with their buyers for supply and Installation of electronic weighing system at customer's site. Sanmar manufactured only certain parts of the said weighing system at their factory and other parts were procured and directly supplied to the customers. The Central Excise Department proposed to demand duty on the entire Contract value of the weighing system installed at the site. The Commissioner of Central Excise dropped the demand and on an appeal filed by the Revenue the CESTAT rejected the appeal. The relevant po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oard of Excise and Customs vide Order No. 58/1/02-CX, dated 151-2002 issued by the Board under Section 37B of the Central Excise Act. After taking into account various decisions of the Tribunal as well as judgments of the Supreme Court including those in the cases of Mittal Engineering (supra) and Sirpur Paper Mills (supra), the Board accepted the legal position that, when the final product was considered as immovable and hence not excisable goods, the same in CKD or unassembled form would also not be dutiable as a whole by applying Rule 2(a) of the Rules of Interpretation of the Central Excise Tariff, though components, inputs and parts, which were specified excisable products, would remain dutiable as such identifiable goods at the time of their clearance from the factory. We find that the impugned order of ld. Commissioner (Appeals) holding the electronic weighing system to be a non-excisable immovable property, while holding the consoles/data processors to be excisable as automatic data processing machines under Heading 84.71, is quite in keeping with the correct view taken by the Board in its order dated 15-1-2002. 3.In the result, the Revenue's appeal stands dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On perusal of the Detailed Design Drawings (GA and PI Map) it reveals that the bought out items are essentially required for the Erection, Commissioning Installation of the Boilers at the site of the customer and without which the Boiler cannot be Commissioned and hence cannot be functional. 24.03 As already discussed, the case of the Revenue is not centred on the status of emergent product on the eve of post Installation and Erection at site of the customer. The case of the Revenue is based on the excisable status of the Goods manufactured and cleared to site of Erection under the terms and conditions of the turnkey contract agreed upon with the customer. It is revealed that the Notice issued by the Revenue intends to demand and recover duty on the Boilers before its erection. Therefore the above view expressed by the Noticee has no relevance and application in the subject matter. 25.00 WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE EVEN IF IT IS ASSUMED THAT ERECTION, COMMISSIONING INSTALLATION OF BOILER/OTHER EQUIPMENT AT THE CUSTOMER'S SITE AMOUNTS TO MANUFACTURE, WHETHER EXCISABILITY OF THE SAME CAN BE DETERMINED BY PUNE-I COMMISSIONERATE: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the Noticee's Company is located within the jurisdiction of Pune-1 Commissionerate and all the 28 SCNS are against the Noticees Pune units only, the adjudication of these Notices will be within the competence and jurisdiction of the Principal Commissioner, Central Excise, Pune-I Commissionerate. The Noticees contention is therefore not acceptable. As regards judgments cited by the Noticee in this regard accordingly need not be dealt with. 26.00 DATA ANALYSIS: 26.01 The following are the scanned copy representative sample of an invoice issued by vendor for supply of Boiler parts to the Noticee but delivered directly at site of assembly of Boilers along with the relevant representative sample of Tax Invoice issued by the Noticee to its customer in respect of supply of the same Boiler parts received through vendors which throw light on the relevant facts of the case. Similarly a representative sample of billing schedule in the already executed turnkey Contract of EID PARRY (INDIA) LTD with the Noticee was taken for case study and its scanned copy is also appended below. Scanned copies deleted 26.02 It is revealed that M/s. Thermax Ltd. Chinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Transmitters Analysis 100% 1122000/- REIMB-Excise 73605/- REIMB - Sale Tax 13382/- 1208987/- Advance 40% 448800/- Net Payable 760187/- The above demonstration establishes that the Noticee while selling the items procured from vendor under reference has charged Rs.11,22,000/- + Central Excise duty and Sales Tax as paid to be reimbursed whereas it was invoiced by vendor to the Noticee at Rs.595516/-+ Central Excise duty and Sales Tax as applicable and thus kept net profit margin of Rs. 526484/- i.e. more than 85% margin. It is noted that no Central Excise duty was discharged by the Noticee on this invoice including the differential value recovered (part Contract value) from the customer. 26.04 The scrutiny of these case records and submissions of the Noticee reveals that Bought Out items referred to in the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vendors price at times and that too excluding the duty paid by the vendor (which is being reimbursed separately by the customer over and above the commercial price of the goods charged) on these Bought Out goods at the time of removal from its factory. 26.05 Warranty Charges; The scope of supply and commercial terms and conditions etc are revealed from the scanned copy of one of the representative sample of turnkey Contract for supply of Waste Heat Recovery Boilers (WHRB) downstream of 1x500TPD Sponge Iron Klin for the Steel of M/s Nova Iron Steel Ltd at their Plant at Chhattisgarh, which is as below; Scanned copy of the purchase order is deleted 26.06 It reveals that the Noticee gives warranty up to 18 months from the date of successful Commissioning of Boiler which includes not only Boiler components manufactured and supplied from their factory but also vendor supplied components direct to site and used in assembly of the final Boiler. This warranty charges is not separately recovered by the Noticee from their customers. It therefore follows that the Contract value agreed includes such warranty obligations. It is settled law that Warranty charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s used in assembly of final Boiler at site, should also account for the cost and scope of Design and Drawings of the goods manufactured at the factory of the Noticees and also at the factory of the vendor manufacturers who manufactured and supplied Goods to Noticee's factory or even direct to Boiler Installation site as per instruction of the Noticee for assembly of Boiler under turnkey Contracts. 26.08 As per the Contract, value of the goods included costs right from drawing and designing of the goods to its Installation and Commissioning and also the costs of its essential spare (bought out) parts. As such the sale or transaction is completed after successful Commissioning of the Boiler or other equipment's. The allegation in the Notice that without these parts a Boiler cannot be commissioned appears to be correct. For instance a Boiler cannot function without parts such as feed water pump, safety valves, process valves, level gauger etc. These parts are necessary to make a Boiler functional. Their value therefore has to be included in the assessable value. It is immaterial that no Modavt credit has been taken by the respondents. The value of bought out items recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Noticee, the turnkey Contracts agreed upon with customers are composite Contracts and the SCOPE OF SUPPLY invariably includes complete Design, Engineering, Manufacture and Supply of Boilers as per the required technical specifications. V. The Noticee's Company is located within the jurisdiction of Pune-I Commissionerate and all the 28 SCNs are against the Noticee's Pune units only, the adjudication of these Notices will be within the competence and jurisdiction of the Principal Commissioner, Central Excise, Pune-I Commissionerate. VI. The Bought Out parts received at Boiler assembly site are used in erection of Boilers and are necessary to make Boiler functional. Their value therefore has to be included in the assessable value. VII. The Noticee are liable to pay interest under Section 11AA/11BB of thecae, 1944 VIII. The provisions of Section 11A(1), Section 11AB and Section 11AC of the CEA,1944 read with Rule 173 Q of the erstwhile Central Excise Rules, 1944,Rule 25 of Central Excise Rules (no.2) Rules 2001/Rules,2002 as the case may be are invocable in this case for demanding the Central Excise Duty/CENVAT duty, for the extended period fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tems comprise of many parts including structural components which are essentially the part of Boiler by way of technical specifications. As per Section Note 4 to the Section XVI of the First Schedule to the Central Excise Tariff Act, 1985, Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the heading appropriate to that function. 4.4 In case of BHEL [2018 (10) GSTL 3 (SC)] Hon ble Supreme Court has held as follows: 3. Both, the adjudicating authority and the Customs, Excise and Service Tax Appellate Tribunal (For short, the Tribunal ) took the view that though clearances were made and transported as components of boiler, the same were liable to be classified under sub-heading 8402.10 and not under sub-heading 8402.90. 4. In coming to the aforesaid conclusion both the authorities relied on an expert opinion of the Technical Adviser (Boilers), Ministry of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uipment constitute auxiliary/accessories of Boiler and Boiler will come into existence even without these auxiliary/accessories. The Boiler inspectorate is always involved in the inspection right from the stage of Raw-material section to the dispatch and erection of various Components where Pressure is involved. It is a fact that the high capacity boilers cannot be transported in one lot to the site, therefore they have to be sent as individual item and sub-assemblies. Therefore, the parts which are essentially needed to construct a complete boiler may be considered under the term boiler. But the parts which are provided with the boiler to enhance the efficiency such as automation, data requisition, indicators, recorders etc. are used for ease and safe operation of boilers and cannot be considered as boiler parts. In the light of the above, BHEL may be asked to separate out the list of such parts (i) which are essential for constructing a boiler and (ii) the parts which are used in boilers but not essential as explained above. 5. That apart, relying on the HSN note Part V under Section XVI, as extracted below, the aforesaid two authorities concluded that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te 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. In the case of CIMMCO Birla [2003 (156) ELT 1019 (T-Del)] following was held. 3 . We heard ld. Counsel for the appellant as well as ld. DR, for the Revenue. There is no dispute on the fact that the goods valued at Rs. 2,21,40,412/- were supplied through the subcontractor of the appellant at the site of the unit. There is no case that the above goods were manufactured by the appellant and cleared from its factory. The decision relied on by the Commissioner (Appeals) has no application in the facts of the present case. In Asha Pavro Electronics Pvt. Ltd. the bought out items formed part of finished goods, therefore, its value had to be added to the finished goods which were cleared from the assessee s unit. 4 . We find no merit in the view taken by the authorities below that the value of the bought out items was also to be added for computing the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se made out that the appellant has supplied any manufactured goods to their buyer at a reduced price, in consideration of advance payment. In fact, all the supplies in the present case were in terms of a contract for about Rs. 28 crores. Out of the above, only part of the goods were manufactured by the appellant. Terms of payment had stipulated percentages of payment due at various stages of the contract. In these circumstances allegation cannot be made that goods supplied were at lesser value than their normal value. Accordingly, this demand also has to fail. In case of Dalal Mckenna Pvt Ltd. [2014 (300) ELT 259 9TMum)] CESTAT held as follows: 9 . Considered their submissions in detail. We find that it is not in disputed that appellants are the manufacturer of 4 items namely Air Separation column/unit (also known as cold box), expansion engine, liquid oxygen pump, liquid nitrogen pump. We have seen through the purchase orders, out of 36 purchase orders, 34 purchase orders pertaining to the items manufactured in their factory. Therefore, in the case of 34 purchase orders appellant has neither supplied nor installed the Nitrogen/Oxygen plant. In two cases, the customers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 4.7 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. In the case of Jupiter Enterprises [2014 (314) ELT 301 (T.)] coordinate bench has observed as follows: 9. On perusal of records, it transpires that the adjudicating authority has erred in coming to conclusion that he is empowered to the demand duty on sizing machines, which are assembled and come into existence at the site of the buyers of the appellant which are situated beyond jurisdiction of adjudicating authority/the Commissioner of the Central Excise, Ahmedabad-I. In our view, the adjudicating authority has totally misread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in view of the fact that the respondent has a contract to erect and commission a boiler and has been disclosing this fact to the Department. For the reasons stated above we hold that the parts removed in several consignments is a boiler in incomplete form and therefore have to be classified under the heading meant for the complete machine, in this case under 8402.10. We uphold the contention of the Commissioner that Rule 2(a) of Interpretative Rules apply to this case. We therefore uphold the contention of the Commissioner and reject the Revenues appeals in so far as this aspect is concerned. (b) Bought out items-inclusion of value thereof : Revenue has challenged the Commissioner (Appeals) decision that the value of the bought out items are not to be added to the assessable value. The various bought out components are auxiliary accessories to the boiler and what is cleared from the factory is a complete boiler; according to the Commissioner. He also accepted the assessees contention that he had not claimed Modvat credit of duty paid on bought out items and therefore the bought out items cannot be said to be the constituents of a boiler. 7. According to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the boilers. 11. The appeal of the Revenue is decided thus : (a) The goods as cleared by the respondents are classifiable under 8402.10 as boilers. (b) The value of bought out items received at site and used in the erection of boilers have to be added to the assessable value of boilers. 4.9 In the case of Siemen Limited [2002 (150) ELT 422 (T-Mum)] CESTAT has held as follows: 3. We have examined the judgments. In the latter cited judgment, the Tribunal had departed from their earlier judgment in the case of Tata Libert Limited [2000 (121) E.L.T. 474 (T) = 2000 (39) RLT 1006] and had adopted the ratio of the judgment in the case of C.C.E. v. Jeetex Engineering Limited [2000 (130) E.L.T. 801]. In the judgment, the Tribunal noticed that the manufacturer had manufactured incomplete UPS and had arranged to supply the batteries as trading activity. The ratio of this judgment squarely applies to the facts of the present case. Shri Umashankar relies upon the Tribunal judgment in the case of Supra Hi-Tech Electro Equipment (P) Ltd. [1997 (93) E.L.T. 604] where the value of batteries was held as includible in the value of the UPS. Shri Prakash Shah distingui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mands which were raised in the show cause notice, no excise is demanded on the above item. If that be so, there is no need to go into the issue raised by the appellant in this appeal as the decision of this appeal either way would not affect the appellant if the duty itself is not demanded thereupon. 6. Thus, while dismissing this appeal, we clarify that if there was no such amount demanded in the show cause notice, the direction contained in para 10 and 11(b) of the impugned order of the Tribunal to the jurisdictional officer to determine and recover the duty from the appellant shall have to go. However, it is only if the Officer is satisfied that no demand was made in respect of aforesaid items while computing the demand. From the reading of the above order of the Hon ble Apex Court 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stallation of computers and training of customer s personnel to operate and maintain it was not includible in the assessable value of the computer. The Court even went to the extent of saying that the value of softwares sold along with the computer was not includible in the assessable value of the computer. 11. In Mittal Engineering Works (P) Ltd. v. Collector of Central Excise, Meerut, 1996 (88) E.L.T. 622 (S.C.) = (1997) 1 SCC 203, Mono Vertical Crystallisers which were used in sugar factories for exhausting molasses of sugar were assembled, erected and attached to the earth at the site of the customers sugar factory. The process involved welding and gas cutting as deep Mono Vertical Crystallisers had to be assembled, erected and attached to the earth by a foundation at the site of the sugar factory. It was held that the erection and installation of a plant was not excisable. 12. In coming to this conclusion, reliance was placed on an earlier decision of this Court in Quality Steel Tubes (P) Ltd. v. Collector of Central Excise 1995 (75) E.L.T. 17 (S.C.) = (1995) 2 SCC 372, in which also it was held that erection and installation charges cannot be included in the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of arriving at assessable value. Even in case of show cause notices wherein it was alleged that the goods manufactured on location were excisable, it is not forthcoming from the show cause notice as to how the duty computation was made on whole contract price. Notably many of the contracts entered into by the Appellant in this appeal are only for supply of goods and supervision of erection and commissioning and thus stands of different footing from the agreements where the Appellant themselves undertook the erection activity. 7. We find that the adjudicating authority has ultimately confirmed the demand against Appellant on whole agreement/ contract price by discussing and relying upon one of the Contract of Boiler of 80 TPH. The demand has been made considering the contract price as value of goods. We find from the agreement that the said agreement is for supply of goods for the 80 TPH Boiler and supervision of erection and commissioning. The Appellant themselves did not carry out erection or commissioning of the said Boiler but after supply of goods only supervised the erection. In such case no duty can be demanded from the Appellant as they are only supplier of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants. However the adjudicating authority failed to appreciate that after dismantling into prices the identity of the goods did not remain as of goods which was recognizable in old sugar factory. It turned into individual components or goods since they were not in the form of knocked down condition. We are thus of the view that by means of any imagination the agreements under which the goods were supplied by the Appellant or in case where the Appellant themselves erected the plants or their sections cannot be held to be any contract for manufacture of excisable goods. We are unable to comprehend that huge boilers erected on site piece by piece with the Appellant s manufactured goods and bought out goods which become immovable property are excisable goods. It cannot be removed in knocked down condition or semi knocked down condition. It has to broken up into pieces which would not even recognizable as boiler. What has come into existence at site are huge boiler systems which were part of power systems or whole sugar manufacturing sections or plants. Undoubtedly the whole property which came into existence are immovable property. Without dismantling these systems they cannot be shift ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , cabling etc., it would be seen that they are not parts of air-conditioning machines manufactured and cleared, but items required purely at site. Therefore, the appellants are right in contending that the cost of boughtout items cannot be included in the assessable value. Relying on the aforesaid decisions the appeal is allowed. 8. Drawing parallels from the above order we find that there is no reason to demand duty on the bought out goods as the Appellant has not manufactured any goods which are recognizable as excisable goods. Further we find that the same controversy arose in the earlier period and the matter travelled upto the Tribunal. The findings of the Tribunal as recorded in case of S.S. Engineers Vs. CCE, Pune III 2008 (221) ELT 54 (TRI) are as under: 3. It is the case of the department that the disputed items were not supplied by the appellants as a whole at the site of the sugar factories but assembled out of the various parts and components supplied by the sugar factories, as seen from the chart herein below :- Sr.No. Description of Excisable Goods Manufactured Parts/components brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c System Control Panel. Tank with pumps, Pipes filings. Roller Movement Indicator, Hydrolic Accumulator Set of Forced Feed Lubricator with pipe fittings, Set of Juice Troughs under the mills, Square Coupling for Tail Bar, Set of Base Frames for DC Motor of mill, set of Foundation Bolts Anchor Plates. Under Feeder Roller complete with Brackets, Pinions, Donnelly type Chute, Level Sensing Device, DC Drive for Mills, Mill Reversing Arrangement complete in all respect, Slow Speed Gear Box, Gear Box complete with Oil Pump, Spur Gear for 1st motion, Spur Pinions for Mill Gearing, Shaft for 1st motion Gear - 2nd motion Pinions, Set of Gear Guards, Pedestal Bearing for Mill Gearing. Base Frames for Mill Gearing complete with foundation Bolts, Turbine complete with Base Frame. Enclosed Reduction Gear Box, Main Auxiliary Panel and Safety Devices, Pressure Gauge, Steam Flow Meters. Tacho meter Panel complete with oil pipes fittings, Alternator complete with Air Cooler. One Set of Battery AVR Excitation Panels. 7 Juice/Water/ Molasses Weighing Scales Registering Counter, Weighed Water Receiving Tank, Check Weighi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... box, starter etc. 16 Juice Sulphiter Juice Sulphiter (with stirrer, drive etc.), S02 recovery tower with chimney. Lime proportionating device, syrup sulphitation unit, S02 recovery tower. 17 Condensors Multi-jet condensor for 750 MM diameter (vapour) pipe including tail pipe, Multi-jet condensor for 1100 MM diameter vapour pipe including tail pipe. It is also the case of the department, as seen from the show cause notices and the impugned orders, that the items are huge items encompassing wide area and cannot be transported and installed as such in any other premises but require to be dismantled before transport and installation at any other site. In view of this admitted position, the ratio of the Apex Court in Triveni Engineering Indus. Ltd. v. CCE, 2000 (120) E.L.T. 273 (S.C.) is directly attracted to the facts of this case. In paragraph 20 of that decision, the Apex Court held that the marketability test requires that the goods as such should be in a position to be taken to the market and sold. In that case, for taking turbo alternator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the show cause notices alleged that the Appellant manufactured the same goods as above and duty demand has been made. Applying the above ratio of the Tribunal we are of the view that the demand of duty made against the Appellant on goods erected, installed at site are absolutely not sustainable. We also find from the Miscellaneous application filed by the Appellant that the jurisdictional Commissioner vide noting dt. 11.11.2008 viewed that the value of the bought out items cannot be included in the assessable value of the manufactured goods in view of the fact that the bought put items did not enter into the factory of the Applicant and no credit is being taken of the duty paid on such items. After this noting the Appellant were not issued show cause notice and thus the department itself appreciated the fact that the duty demand is not sustainable. Even otherwise also we find that if the revenue demands duty on bought out goods in that case it has not been disputed that the goods were itself duty paid and the Appellant did not avail any credit of the same. Further even the bought out goods have been used in erection of the Sugar plant or its sections at site which are non excisable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or other sections, we do not find any reason to demand duty on the same. In case of Kerala State Electronics Controls Power Systems P. LTD. 2004 (171) ELT 281, the Tribunal held as under : 5. On a careful consideration and perusal of the impugned orders, we notice that the bought out items were independently supplied to the site and they are in the form of junction boxes, signal heads and cables. They are not part of the traffic controller. All these items go to form traffic signal system, which according to the appellant is an immovable property. The authorities below have held that the value of the bought out items is to be added to the assessable value of traffic controller. On a perusal of the judgments cited by the Counsel we find that the value of the bought out items is not required to be added to the duty paid goods cleared by the assessee from their factory. These judgments clearly apply to the facts of the case while the citations relied by the SDR pertains to a situation where bought out items are essential parts of the items supplied by the assessee and hence its value was required to be added. The situation is not the same in the present case as all the bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71) ELT 902 (Bom). 3. On the other hand, Shri V. K. Shastri, learned Asstt. Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. 4. We have carefully considered the submissions made by both sides. We find that the Revenue has not disputed the value ofRs.42 lakhs for each LPG bullets. However, the demand was raised only on inclusion of the value in respect of bought out items and certain activities taken place at the site for erection and installation of the said LPG bullets. We find that all these elements such as bought out items are undisputedly supplied from the supplier to the site. It is not taking part in the manufacture of LPG Bullets. These bought out parts are used only for erection and installation of LPG Bullets at site and other activity at site are also related to erection and installation. The said activity of erection and installation in our considered view is not amount to manufacture. Moreover, after erection and installation of the LPG Bullets, it become immovable goods. For this reason also, if at all any activity by any imagination is amount to manufacture, by virtue of immovability of LPG Bullets, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply of the bought out items directed to their customers and have paid the applicable sales tax/VAT, the same does not attract levy of excise duty. We also take notice of the fact that in para No. 27.14of the impugned order the Adjudicating Authority observed as follows :- I find that the bought out items have not been brought to the factory premises and have not been used in the manufacturing of the goods - control panels. The bought out items were directly sent to their customers and being essential and inseparable part of the control panel, they were installed at the site by them. 7. Thus we find that it is an admitted fact that the bought out items have never entered the factory premises of the appellant so as to become part of the manufactured control panel nor the same have been cleared along with the control panels. Accordingly, we allow these appeals and set aside the impugned order. The appellant will be entitled to consequential benefits in accordance with law including refund of amount deposited during investigation. Accordingly, the personal penalty on the Director Mr. Dinesh Kumar Bhardwaj is also deleted. From the consistent views of this Tribunal s in abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessable value of the final products under section 4 of the Central Excises and Salt Act, 1944 (1 of 1944). TABLE S. No. Description of inputs Description of final products (1) (2) (3) 1. All goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the following, namely, - (i) goods classifiable under any heading of Chapter 24 of the Schedule to the said Act; (ii) goods classifiable under heading Nos. 36.05 or 37.06 of the Schedule to the said Act; (iii) goods classifiable under subheading Nos. 2710.11, 2710.12, 2710.13 or 2710.19 (except Natural gasoline liquid) of the Schedule to the said Act; (iv) high speed diesel oil classifiable under heading No. 27.10 of the Schedule to the said Act. All goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the following, namely, - (i) goods classifiable under any heading of Chapter 24 of the Schedule to the said Act; (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Tribunal has in the case of Thermal Systems Pvt Ltd. [2019 (3) TMI 787- CESTAT HYDERABAD] held as follows: 5. On careful consideration of the submissions made, we find that the adjudicating authority, in the case in hand, has considered the entire issue in its correc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the case, we find that the reasoning adopted by the adjudicating authority, in the case in hand, in the impugned order is correct, legal and does not require any interference. 4.14 We also note that in the case of Statfield Systems (Coating) Pvt Ltd. [1996 (87) ELT 510 (T)] following has been held in respect of adding of the design and engineering charges: 9 . We also find that the case of Indoprint Enterprises cited by the Learned DR is distinguishable. In that case what was supplied was a part of the machinery as a bought out item. Manufacturers supplied complete manufactured goods to the customer and it was sale value of the bought out item cleared by the respondents during the relevant period. In the case of Radiant Electronics Ltd., the Tribunal held that when bought out items are supplied besides manufactured articles value of such bought out items is not includible even if they are essential for the operation of manufactured goods provided they are not fitted or attached to the goods before clearance and no process is undertaken on such bought out items. Here the submission made before us is the bought out items are actually used in the fabrication of the plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re bringing of the duty paid parts in an unassembled form at one place, i.e. at the site does not amount to manufacture of a plant. Section 2(f) of the Central Excises and Salt Act, 1944 (for short the Act ) defines the word manufacture to include any process incidental or ancillary to the completion of a manufactured product. Any process by which an object becomes a new commercial goods would be included in the definition of manufacture . However, simply collecting together at site the various parts would not amount to manufacture unless an excisable movable product (say a plant) comes into existence by assembly of such parts. In the present case, as the petitioner has stated that the waste water treatment plant does not come into existence unless all the parts are put together and embedded in the civil work. Waste water treatment plant does not become a plant until the process which includes the civil work, is completed. In our view, therefore, no commercial movable property came into existence until the assembling was completed by embedding different parts in the civil works. 11. Similarly, in Ion Exchange Ltd. s case (supra), by a majority, it has been held that manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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