ORDER
Gowri Shankar, Member (T)
1. The appellant manufactures what is known as uninterrupted power supply (UPS for short). It is not disputed that depending upon nature of the use UPS may require a battery or can function without it.
2. We are told that the UPS performs various functions, some of them relating to providing constant voltage, filtering out undesirable sergeants bites (sic) in the power supply. For these purposes battery is not required. However, a UPS, appropriately so called, also steps into the picture when the supply from the main power supply is interrupted and thus continuous i.e., uninterrupted power supply so that the goods, material or any information under process is not lost as a result of the disruption in power supply.
3. The appellant in some cases supplied the UPS equipped with the battery, which provides power by itself in the event of breakdown and in some other cases supplied UPS without the battery. The question for consideration in this appeal is whether, in those cases where the battery was supplied, the cost of that battery should form part of the assessable value of the UPS. In the order impugned in the appeal the Collector (Appeals) has confirmed the view of the Assistant Collector that such cost of the battery should form part of the assessable value.
4. The advocate for the appellant agrees before us that the matter had been settled against him in two decisions of the Tribunal. These are : CCE v. Electronics and Control -1998 (27) RLT 816 and Kerala State Electronics Development Corporation v. CCE -1994 (71) E.L.T. 508. He however, contends that there are decisions of the Tribunal in his favour and these two decisions are erroneous and the matter is required to be referred to a larger bench. The decisions which he cites in his favour are the following: Uptron India Limited v. CCE, Allahabad -1994 (73) E.L.T. 848; National Radio and Electronics Company Ltd. v. CCE – 1995 (76) E.L.T. 436 and Eureka Forbes Limited v. CCE -1996 (83) E.L.T. 334. Some other decisions are also cited which we shall refer to.
5. In CCE v. Electronics and Controls the Tribunal was concerned with a situation of fact which is essentially identical to the one that is before us.M/s. Electronics and Controls sold UPS to two kind of buyers. The first kind bought the UPS without battery, and the second type of buyers purchased UPS with the battery. The Tribunal in that decision held that UPSs in each of these cases performs different functions. It noted that even if it is accepted that a UPS without a battery can function for process continuous, cleaning and filtering the power supply, the battery was an essential pre-requisite for an UPS to provide uninterrupted power supply. In such cases it was the source of the power. The persons who purchased the UPS with the battery but did so because they wanted to use the system to ensure uninterrupted power supply (in case when the main power failed). Therefore, for such UPS the battery was an integral and essential part of the UPS as had been held in Kerala State Electronics Development Corporation Ltd. v. CCE. It therefore, set aside the view of the Collector (Appeals) and accepted the view of the Assistant Collector that the cost of the battery has to be included.
6. The contention of the advocate for the appellant is that the supply of the battery is optional, except for the battery that the other components UPS supply in all cases are identical and the performs the same functions. The size of the battery may vary from customer to customer depending upon the time for which he required uninterrupted power supply. The battery is in the nature of an optional accessory and is not essential for the function of UPS or as he says, a static converter which he says, how the instrument rightly to be called. He therefore, says that the decision in Kerala Stale Electronics Development Corporation v. CCE that a battery is an integral part of UPS is to be distinguished; and the decision in CCE v. Electronics and Controls referred to the larger bench. He relies upon the decision of the Tribunal in National Radio Electronics Company Ltd. v. CCE -1995 (76) E.L.T. 436 in support of this proposition that a battery supplied as an optional accessory could not be integral pars of the system. The other decisions of the Tribunal which he cites to say that cost of the optional accessories supplied with the equipment even if essential for maintaining or functioning of the product should not form part of the assessable value. For this proposition, he cites the decision of the Tribunal in CCE v. Kishor Pumps Pvt. Ltd. -1997 (91) E.L.T. 91.
7. The distinction between a static converter and an uninterrupted power supply on the ground that the former does not perform the function of providing continuous power supply during a break in the main power supply whereas the latter does this appear to us to be correct. If that is the case the appellant was in fact supplying two types of goods. The static converter, which was supplied did not have and was not required to have a battery, as an essential part. The units which were supplied with the battery therefore being something other than the static converter i.e., a UPS. It cannot be anybody’s case that UPS which has as one of its functions supply of power when the main power supply breaks down, with the object of ensuring that the materials in process are not lost due to the loss of power, does require such an alternative source of power which in this case is a battery. In that situation we see no reason to differ from the conclusion of the Tribunal in CCE v. Electronics and Controls -1998 (27) RLT 816 that those customers who bought the UPSs with the battery were asking for the supply of battery to ensure that the UPS performs the function of providing the current during break down which the buyers of the other equipment do not require and therefore, do not ask for. It would then follow that in the case of these goods the battery was an essential and integral part of UPS. Its cost was, therefore, rightly to be included.
8. This aspect i.e. in the case of UPS purchased for providing, in addition to the functions of one static converter, the facility of uninterrupted power supply, a battery is an essential component was not a subject matter of the proceedings in National Radio and Electronics v. CCE. The argument recorded in that decision as only shows that the battery was not a component or an integral part of the UPS and can function without a storage battery, as the Tribunal records, a simple UPS system can function without a battery. The distinction between such a ‘simple’ UPS and more complex one for which sophisticated battery is essential, does not appear to have been urged before the Tribunal which therefore, had no occasion to examine it. It does not appear to be any relevant to the facts before us.
9. The advocate for the appellant relies upon the decision CCE v. Kishor Pumps Pvt. Ltd. -1997 (91) E.L.T. 91 to say that the fact of battery being essential for functioning of the UPS cannot itself justify its inclusion. He says that in decision CCE v. Kishor Pumps Pvt. Ltd. the Tribunal took the view that an electric motor cannot be regarded as an integral part of the pumps although it is essential for the pump to function. The Tribunal noted that a power driven pump is complete itself as an excisable goods and is a marketable commodity without an electric motor and therefore electric motor is not an essential for marketing of the pump. The fact that motor is an essential for the functioning of the pump does not make it an integral part. This position may come to the appellant’s aid in the case of static converter which is purchased only for its function of filtering and purifying the current and providing constant current. However, on the functioning that the UPS that were concerned, cannot function without a battery and it is an integral part of such a system. It would inevitably then follow that the cost of that battery is to be included. This distinguishes it out from the power driven pump which is marketable unlike the UPS without a battery.
10. The other decisions cited by the advocate for the appellant are expressing the view that cost of optionally supplied items would not form part of the assessable value. As we have seen, in the case of UPS under consideration battery is not found to be optional accessories. These decisions therefore, are not relevant.
11. Another argument that was advanced, that since batteries in question were not cleared along with the UPSs, unlike in the case of CCE v. Electronics and Controls and therefore, their value ought not to be included. We do not see how this is of significance. The goods were supplied as a part of the same contract, and as we have found, are essential for the functioning of the UPS. Further UPS was erected and commissioned by the appellant. The order for the supply of battery was placed by the appellant. A UPS as a complete system has emerged by the activities of the appellant. Therefore the fact that the goods did not reach the appeallant’s factory does not appear to have any significance.
12. We therefore, see no reason to interfere. Appeal dismissed.
