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India Tube Mills & Metal Industries V/S Commissioner of C. Ex., Mumbai

    Final Order No. A/86481/2017-WZB/EB in Appeal No. E/175/2007-Mum

    Decided On, 22 March 2017

    At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Mumbai

    By, THE HONORABLE JUSTICE: RAMESH NAIR
    By, MEMBER AND THE HONORABLE JUSTICE: RAJU
    By, MEMBER

    For Petitioner: Anjali Hirawat, Advocate And For Respondents: V.K. Shashtri, AC (AR)



Judgment Text


1. The fact of the case is that the appellants have manufactured LPG Bullets for execution of the composite project for manufacture and supply of LPG Bullets and erection and installation of the same at the site of M/s. Bharat Petroleum Corporation Ltd. They have valued the LPG Bullets for Rs. 42,00,000/- (Rupees forty two lakhs) each bullet as against the total project cost of Rs. 1,71,37,000/-. In the show cause notice, the department has proposed that an amount of Rs. 70,14,400/- was escaped from payment of excise duty on the ground that the appellants have not added the value of bought out items and other manufacturing activity carried out at the site. It was also contended in the show cause notice that the finished goods as per purchase order has come into existence at site at Goa and the goods are in movable condition, as they are not fixed/attached to the earth by nuts and bolts or by anchor chains and they are only covered by soil and stone pitching for safety reason. The goods being in movable condition at the site, the said finished goods at Goa will be charged to Central Excise duty on the transaction value. The adjudicating authority confirmed the demand. Being aggrieved by the Order-in-Original, the appellant filed appeal before the Commissioner (Appeals) who also affirmed the Order-in-Original and rejected the appeal filed by the appellant. Therefore, the appellants are before us. Ms. Anjali Hirawat, learned Counsel for the appellant submits that the value of the LPG Bullets were correctly arrived at Rs. 42 lakhs for each bullets, which is evident from the invoices raised for the said amount against the sale of the LPG Bullets to M/s. Bharat Petroleum Corporation Ltd. This value has also been certified by the Chartered Accountant. The department's contention is that all the bought out items and other activity carried out at the site should be added in the assessable value of the manufactured goods. She submits that the appellant is only manufacturing LPG Bullets and clearing the same from the factory at the site.

1.1 As regards the bought out items, it is supplied directly from the supplier to the site and the same do not involve any manufacturing activity of LPG Bullets. All other activities such as fitting out of the bought out items and erection and installation is taking place at the site of the customer. All these activities are carried out to make the LPG Bullets as immovable goods, therefore, all such activities are not part and parcel of the manufacturing activity of the appellant in respect of LPG Bullets. Therefore, inclusion of any amount over and above the price of the LPG Bullets adopted for clearing of the goods from the factory is incorrect and without authority of law. In support, she placed reliance on the following decisions:-

(a) Triveni Engineering & Indus. Ltd : 2000 (120) E.L.T. 273 (S.C.)

(b) Milestone Aluminium Co. Pvt. Ltd. - 2007 (214) E.L.T. 417 (T)

(c) Sanmar Weighing Systems Ltd : 2005 (190) E.L.T. 228 (T)

(d) Emerson Network Power India Pvt. Ltd. - 2004 (176) E.L.T. 168 (T)

(e) Fuse Base Eltoro Ltd : 2000 (116) E.L.T. 279 (T)

(f) Goetze (India) Ltd : 2004 (169) E.L.T. 274 (T)

(g) Kerala State Electronic Dev. Corpn. - 2008 (224) E.L.T. 88 (T)

(h) BHEL v. CCE : 2001 (138) E.L.T. 1223 (T)

(i) Neycer India Ltd. - 2005 (192) E.L.T. 620 (T)

(j) Mahindra & Mahindra Ltd : 2015 (321) E.L.T. 513 (T)

(k) Pace Marketing Specialities Ltd : 2000 (119) E.L.T. 77 (T)

(l) Jai Hind Oil Mills & Co : 1994 (71) E.L.T. 902 (Bom).

2. On the other hand, Shri V.K. Shashtri, learned Asstt. Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order.

3. We have carefully considered the submissions made by both sides. We find that the Revenue has not disputed the value of Rs. 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 g

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oods. For this reason also, if at all any activity by any imagination is amount to manufacture, by virtue of immovability of LPG Bullets, the activities at site cannot be charged to excise duty. With these undisputed facts, we are of the view that the value of Rs. 42 lakhs adopted by the appellant in respect of LPG Bullets, which is not in dispute, no further addition can be made. As per our above discussion, the demand does not sustain. Accordingly, the impugned order is set aside and the appeal is allowed.
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