Ece Industries Ltd. vs Collector Of Central Excise on 30 December, 1997

Customs, Excise and Gold Tribunal – Delhi
Ece Industries Ltd. vs Collector Of Central Excise on 30 December, 1997
Equivalent citations: 1998 (99) ELT 476 Tri Del


K. Sankararaman, Member (T)

1. The appeal relates to the question whether the department was justified in adding certain charges incurred by the appellant manufacturer for having certain tests carried out in outside premises by specialised agencies like BHEL and CPRI on the transformers manufactured by them would be includible in the assessable value of such transformers. The case of the appellant is that such charges are incurred by them only in respect of certain numbers of transformers subjected to such tests by the concerned agencies as per the specific requirement of some of their customers. Such tests are not carried out on all transformers manufactured by them. Appellant had been carrying out certain checks which can be carried out in their own factory in the course of manufacturing process and such charges are included in the cost of manufacture and duty is paid. There had been some earlier proceedings against them which had led to the jurisdictional Assistant Collector dropping the demand issued on an earlier occasion for the inclusion of the testing charges relating to tests carried out outside their factory by other agencies. This aspect was stressed by the learned Counsel for the appellant in support of the alternative plea that in any view of the matter the application of the extended period of limitation was not justified as there was no suppression or wilful misstatement on their part in not including the testing charges in the assessable value with intent to evade duty.

2. The answer of Shri M. Ali, learned DR to this submission made in support of the appeal is that the charges in question relate not only to impulse testing but for other aspects also. He contends that these are not merely testing charges but certain processes carried out in the course of manufacture, expenses for which would be includible in the cost of manufacture of the excisable goods in question. Further, on the question of limitation, he submits that the fact that the Assistant Collector had passed an order in respect of a particular price list holding that such charges incurred for tests/process carried out outside the factory would be includible in the assessable value of transformers has to be taken as applicable to the particular price list where the appellant might have placed copies of the contract and it cannot be taken that the same position would hold good for supplies made under other contracts where the factual position may be different warranting a different stand by including such charges as having been incurred in the course of manufacturing process and hence includible in the assessable value of the final product.

3. We have gone through the papers and the submissions made by both the sides. It is a submission of Shri M. Ali that though the show cause notice refers to the charges on account of temperature/impulse/heat run and short circuit test, the reference to test cannot be taken to mean that these expenses have been incurred only for the purpose of test. Impulse test is not the only activity carried out at the outside location but other activities relating to temperature, heat run and short circuit are also gone through and these would be in the nature of manufacturing process itself and not confined to test alone. We do not find this plea to be acceptable as the trend of submissions made by the appellant’s representative before the lower authority and the discussions in the order do not indicate that the activities in question referred to above fail in the area of manufacturing process and not confined to testing only; it has come on record that these tests are carried out at the instance of particular customers who take the precaution of asking for the additional test by the concerned agencies over and above the normal test carried out by the appellant in his own factory. The case is thus covered by the earlier decisions of the Tribunal in respect of impulse testing charges which were held to be not includible in the assessable value of the transformers. The analogy will equally apply to other tests applied in the other tests like heat run, short circuit etc. We find that the submission made in regard to limitation is also valid. The impunged order is set aside and the appeal is allowed.

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