ORDER
S.S. Sekhon, Member (T)
1. After hearing both sides in these two appeals, following orders are passed.
2. The appellants are manufacturers of certain parts and machinery for chemical industries. These are manufactured as per their own drawings and designs and as per the specifications provided by their customers. In certain cases, it was observed that another Public Limited Company by name M/s IBI Chematur (Engg & Consultancy) Ltd at Bombay (hereinafter referred to as IBIC), and who are engaged in the activity of undertaking consultancy, design and engineering services related to Chemical, petro-chemical, fine chemicals, organic chemicals, pharmaceutical, explosives etc. during the period impugned herein, supplied such consultancy as per agreements entered into by the customers of the appellant assessee under the Central Excise Act herein. The disputed demands of duties were raised under Section 11A along with proposals for penalty under Section 11AC on the following grounds:
a) The appellant Company and IBIC were one and the same Company and therefore they were required to be clubbed together;
b) Designing and Engineering documentation charges received by IBIC from EID were required to be included in the ass
essable value of Plant & Machinery manufactured and supplied by the appellants to EID;
c) Notional interest on advances and security deposits received by the appellants and by IBIC was required to be included in the assessable value for payment of duty;
d) Duty was payable on Damages received by the appellants as well as by IBIC on account of termination of contract by TEWL;
e) Designing and Engineering Charges received by IBIC from TEWL were required to be included in the assessable value of Plant and Machinery manufactured and supplied by the appellants to VAMOC;
f) Duty was payable on SS Sheets /Plates cleared by the appellants as they were parts of Plant & Equipment; and
g) There was shortage of 6676.93kgs in raw material stock which was alleged to have been clandestinely removed without payment of duty.
3. Pursuant to the same, the Commissioner vide order impugned held
(a) that the two companies cannot be clubbed together i.e. the appellant assessee herein and the Engineering Consultancy firm.
(b) he held that design and engineering documentation and agreements entered into up to the extent of 70% of the contracted value received by the engineering company from the customers who were supplied with plant and machinery by the appellant assessee herein has to be considered for addition to the value under Section 4 of the Act to determine the duty liability on the plant and machinery items and cleared to such customers.
(c) He did not hold the advances received by the appellants from other company as liquidation of damages on termination of contract to be chargeable to duty.
(d) If the goods cleared to other customers similarly designing engineering documentation and specification charges received by the assessee company for designing equipment for the customers would be included in value for purpose of determining the duty.
(e) He dropped the proposal on interest on advances/security deposit.
(f) That plates and sheets cleared by the assessee as such after being cut to size are not manufactured goods and shortage of raw materials was not chargeable to duty. Penalties were imposed.
4. The other appeal herein, has been filed by the Engineering and Consultancy Services, who have been imposed penalty under Rule 209A.
5. Hence these appeals.
6. On considering that the Commissioner has placed reliance on para 8.4 of the agreement entered into by the Customers, with the Consultant Engineering Company to arrive at the figure of 70% of such contract value to be loaded and in view of the fact that the contract for engineering consultancy was inclusive among other charges for consultancy and drawing and designing and procurement etc for goods, which were not manufactured by the assessee, and also considering that the break up of the cost have been provided by the appellants in the present appeal filed which are photocopies of the billing schedule for detailed engineering and delivery of documents as sent to the common customers of the assessee and the consultancy company and this material was admittedly not before the learned Adjudicator. A perusal of this material, would indicate that the cost of drawing, designing etc which can be added as per the decisions, on the subject, would not amount to 70% of the contract value as arrived at by the Ld Commissioner. Since the figures given in these billing schedules have been urged to be relevant for determining the costs that can be added to determine duty on excisable goods manufactured by the appellant assessee herein, and admittedly these documents were not before the Ld Commissioner, we would consider to set aside the order and remand the matter back to the Commissioner to reconsider this billing schedule, after hearing the appellants on how they arrived at the figures therein, after due ascertainment of the amounts that could be added as per the decision which has been cited and relied upon by the Ld Advocate for the appellants, he should arrive at the duty demands afresh.
7. The matters are therefore required to be redetermined. After determining the duty liability, penalty if any, in the facts and circumstances of this case, which could be imposed should be determined.
8. In view of the findings, these appeals are allowed as remand to the original authority for de novo adjudication.
(Pronounced in Court)