ORDER
C.N.B. Nair, Member (T)
1. M/s Electronics Corporation of India Ltd. (ECIL) are in appeals. They are Public Sector Undertaking. The dispute is about the Central Excise valuation in respect of Air Traffic Control System (ATC) supplied by them to Air Force, Air India Ltd. Airport Authority of India. The ATC system consists of of (i) VHF transmitter (ii) VHF AM receiver (iii) remote control and their accessories. The accessories are in the nature of aerial, cable head phones, hand mike, line interface unit etc. ECIL manufacture part of the items required for ATC system like VHF, transmitter, VHF receiver, remote control. Accessories are procured from the market and supplied along with the manufactured items in terms of the order of supply the buyers. Central Excise authorities have taken the view that the entire supply should be subjected to duty (as ATC System) falling under heading 85.25, while the assessee’s submit that they are liable to pay duty only on the items manufactured by them i.e. VHF transmitters, receivers and remote control.
2. During the hearing of the case, learned Counsel for the appellants has pointed out that, the basis for the impugned orders that the accessories are essential for the functioning of the Air Traffic Control System, is not a permissible consideration for the purpose of central excise assessment. The appellants contend that, excise being a levy on manufacture, duty liability will be restricted to the goods manufactured by an assessee and not the goods supplied by an assessee. Learned Counsel has also pointed out that it is settled law that bought out accessories “however essential” cannot be treated as part of the manufactured machine and subjected to duty. Learned Counsel in this context has brought to our notice the decision of this Tribunal in the case of Fuse Base Eltoro Ltd. – 2000 (116) ELT 279 (T), in particular following the observations :
“Bought out items however essential, cost of the same cannot be added to the assessable value in the absence of the finding that it is an integral part of the main item.”
Learned Counsel has also relied on this Tribunal’s decision in the case of Super Electronics vs. C.C.E. Meerut – 2001 (127) ELT 302.
3. We have perused the records and also considered the submissions made by the learned SDR. Central Excise is a levy on manufacture. Therefore, the levy has to limit itself to goods manufactured by an assessee. It is well settled that bought out accessories, howsoever essential, supplied along with a machine, cannot be subjected to duty. The impugned orders go contrary to this principle. They are, therefore, not sustainable. The impugned orders are set aside and the appeals are allowed with consequential relief, if any, to the appellant.