Aquarius Technologies Pvt. Ltd vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. II

APPEAL No.E/1967/05

(Arising out of Order-in-Appeal No.PII/BKS/609/2004 dated 22/12/2004 passed by Commissioner of Central Excise & Customs (Appeals), Pune)

For approval and signature:

Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S. S. Garg, Member (Judicial)

1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy :Seen of the Order?

4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================

Aquarius Technologies Pvt. Ltd., Appellant Vs. Commissioner of Central Excise, Respondent Pune

Appearance:

Shri.MKS Joshi, Advocate for appellant Shri.NN Prabhudesai, Supdt. (AR) for respondent

CORAM:

Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S.S. Garg, Member (Judicial)

Date of Hearing : 04/08/2015 Date of Decision : /10/2015

ORDER NO

Per: SS Garg

1. This appeal is directed against Order-in-Appeal No.PII/BKS/609/2004 dated 22/12/2004 passed by Commissioner of Central Excise & Customs (Appeals), Pune, vide which the learned Commissioner (Appeals) has dismissed the refund claim filed by the appellant by upholding the order of the adjudicating authority.

2. Brief facts of the case are that the appellant is an SSI unit engaged in the manufacture and sale of machines, mechanical appliances and parts thereof, i.e. light weight construction equipments and systems falling under CTH No.8479 of the Schedule to the CETA, 1985. During the course of audit, the audit party raised objections regarding the amounts recovered by the appellant under the heading start up training and commissioning charges from the customers, who purchased their systems. As per the audit, these charges are mentioned in the contracts and shown separately in their invoices are required to be added in the assessable value and the duty should be paid accordingly. On the other hand, the stand of the appellant was that the appellant had bonafide belief that charges recovered on account of training the customers staff are not includable in the assessable value. In spite of that they calculated and paid the amount of Rs.1,78,320/- on 22/07/2002 through TR-6 challan under protest by debiting the duty in PLA without waiting for any written communication from the department. Thereafter, the appellant filed a refund claim on the basis of instructions issued by the CBEC vide Circular No.354/81/2000-TRU dated 30/06/2000 which seeks to clarify that the amount charged for training customers staff is not includable in the assessable value.

2.1 The Assistant Commissioner issued a show-cause notice to the appellant to show-cause as to why the refund claim of Rs.1,78,320/- should not be rejected under Section 11B of the Central Excise Act, 1944. The appellant filed reply to the show-cause notice and submitted that start up and commissioning charges are the terms commonly used in the trade parlance whereas charges are only towards start up training provided to the customers staff. The Assistant Commissioner dismissed the refund claim and aggrieved by the same, the appellant filed appeal before the Commissioner (Appeals), who vide impugned order dated 22/12/2004 rejected the refund claim by upholding the decision of the adjudicating authority. Now the appellant is before us challenging the impugned order passed by the Commissioner (Appeals).

3. The learned Counsel for the appellant submitted that the charges towards training provided to the customers staff are not includable in the assessable value as the activity of training has no nexus with the activity of manufacturing, sale or marketing of the product and it does not enrich the value of their products. He further submitted that the Board clarified the concept of transaction value vide Circular cited supra clarifying that any charges in connection with the manufacture, marketing, selling of excisable goods shall form part of the assessable value. In support of his contention, the learned Counsel cited the following judgements:

a) PSI Data Systems Ltd., Vs. CCE  1997 (89) ELT 3 (SC)

b) Thermax Ltd., Vs. CCE  1998 (99) ELT 481 (SC)

c) Brahmos Aerospace Pvt. Ltd., Vs. CCE, Hyderabad  2014 (307) ELT 795 (Tri-Bang)

d) Rockwell Automation India Pvt. Ltd., Vs. CCE, Ghaziabad  2008 (228) ELT 127 (Tri  Del)

e) Minicomp Ltd., Vs. CCE Aurangabad  2003 (157) ELT 34 (Tri-Mumbai)

f) CCE Bangalore Vs. Kirloskar Electric Co. Ltd., - 2005 (182) ELT 334 (Tri-Bang)

g) National Radio & Electronics Co. Ltd., Vs. CCE, Aurangabad  1999 (105) ELT 59 (Tri)

h) Uptron India Ltd., Vs. CCe, Kanpur  2001 (135) ELT 311 (Tri-Del)

4. On the other hand, the learned AR reiterated and supported the impugned order and submitted that the charges on account of training the staff of customers should be included in the assessable value being part of the same transaction. He further submitted that the refund sought by the appellant will be hit by bar of unjust enrichment as the appellant has not been able to establish that the same has not been recovered from the customers. In support of his submissions, he cited the following judgements:

a) Tata Motors Ltd., Vs. CC (Imports) Mumbai  2014 (308) ELT 559 (Tri-Mumbai)

b) Hindustan Petroleum Corporation Ltd., Vs. CCE, Mumbai  2015 (317) ELT 379 (Tri-Mumbai)

5. We have heard both sides and perused the records.

6. The only point for consideration before us is that whether the charges towards training provided to the customers staff is includable in the assessable value or not. As per the submissions by the learned Counsel for the appellant that these charges are not recovered from every customer. The customer is at liberty to get their staff trained from the appellant or not. The appellant produced both copies of invoices where charges on account of training are recovered by the appellant and also invoices where it is not so recovered. The charges on account of training the customers staff is separately shown in the invoices wherever charged and recovered. The arguments of the learned Counsel for the appellant that the activity of training has no nexus with the activity of manufacturing, sale or marketing of the product and the same does not enrich the product has force. The Honble Apex Court in the case of PSI Data Systems Ltd. (supra) held that the charges for installation of computers and training of customers personnel to operate and maintain it was not includable in the assessable value of the computers. Similarly, in the case of Kirloskar Electric Co. Ltd., National Radio & Electronics Co. Ltd., Minicomp Ltd. (supra), it has been held that the amounts collected for training are not includable in the assessable value.

6.1 The above cited judgements are squarely applicable to the facts of the present case and we hold that the charges on account of training customers staff being purely optional has no nexus with the manufacturing and marketing of goods and therefore, not includable in the assessable value. Therefore, we are of the considered view that the appellant is entitled to the refund of Rs.1,78,320/-.

6.2 The learned AR submitted that the grant of refund to the appellant at this stage would be hit by the principles of unjust enrichment and onus lies upon the appellant to establish that the said amount has not been recovered from the customers and that incidence of duty has not been passed on to customers. In support of his claim, the learned AR cited the case of Tata Moors Ltd. and Hindustan Petroleum Corporation Ltd., (supra). In the absence of any material on record to produce by the appellant, it is not possible for us to give any definite findings regarding the bar of unjust enrichment. Therefore, keeping in view, the factual and legal position cited above, we allow the appeal of the appellant by way of remand to the lower adjudicating authority to decide the question of unjust enrichment.

6. Thus, the appeal is allowed by way of remand.

(Pronounced in Court on .)

(P.K. Jain) Member (Technical) (S.S. Garg) Member (Judicial)

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