M/S. Delta Electrotrade Control P. Ltd vs Commissioner Of Central Excise, Thane

[Arising out of Order-in- Appeal No. BR/86/Th-I/2004 dtd. 31/12/2004 passed by the Commissioner(Appeals) of Central Excise, Mumbai-IV]

For approval and signature:

Honble Mr. P.K. Jain, Member(Technical) Honble Mr Ramesh Nair, Member(Judicial)

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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 : 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? =======================================================

M/s. Delta Electrotrade Control P. Ltd. : Appellants

VS

Commissioner of Central Excise, Thane : Respondent

Appearance

None for the Appellants Shri. V.K. Shastri, Asst. Commissioner(A.R.) for the Respondent

CORAM:

Honble Mr. P.K. Jain, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 28/4/2015 Date of decision 28/4/2015

ORDER NO.

Per : P.K. Jain

Brief facts of the case are that the appellant is engaged in the manufacture of Transformer, Voltage Stabilizer. They are clearing the same on payment of duty. However these goods are transported by the appellant to the buyers premises and there these are required to be installed/commissioned. Appellant is receiving certain amount for the said erection and commission, as contract receipts. Revenue has issued demand notice on the ground that the said charges will form part of assessable value of goods, as transaction value will include erection and commissioning charges. Demand notice was issued on 27/11/2003 invoking extended period of limitation and it is pertaining to 1/7/2000 to 31/3/2002. The case was adjudicated by Asstt. Commissioner who confirmed duty amounting Rs. 2,55,670/-, penalty of equal amount and interest. Aggrieved by the said order, the appellant filed appeal before the Commissioner(Appeals) who has also confirmed the demand, aggrieved by the said order appellant is before us.

2. Appellants contention is that the activity of erection, installation and commissioning of the equipment is a service and is post manufacturing activity and nothing to do with the manufacturing activity and therefore the charges recovered for the said activity will not form part of the assessable value. It is further submitted that Board vide Circular No. 643/34/2002-CX dt. 1/7/2002 has clarified so on point No. 10. It was submitted that transaction value would include the price actual paid or payable for the goods, when sold and includes in addition to the amount charged as price, any amount that the buyer if liable to pay by reason of or in connection with the sale. In the present case, the said charges are not in connection with the sale of goods but are in connection with erection, installation and commissioning. Ld. Counsel also submits that judgment of Honble Supreme Court in the case of Thermax Limited Vs. CCE[1998(99) ELT 481] clarifies that erection, installation and commission charges will not be included in the value of the goods.

3. Learned A.R. reiterates the findings of the original authority as well as first appellate authority and submits that amount received for erection, installation and commissioning charges is part of the transaction value and would therefore be included in the assessable value.

4. We have considered the rival submissions.

5. We find that it is not disputed by the Revenue that the contract receipt is relating to erection, installation and commissioning charges for the transformer and voltage stabilizer. The said erection, installation and commissioning is done by the appellant in the customers premises. Further the goods when cleared from the factory are ready to use and complete in all respects. Erection, installation and commissioning in the present facts and circumstances of the case cannot be considered as part of the manufacturing activity of the goods and would therefore not form part of the assessable value of the goods. These activities are post manufacturing services. In view of the Honble Supreme Courts judgment in the case of Thermax Limited(Supra), we allow the appeal.

(Operative part pronounced in Court)

Ramesh Nair Member (Judicial) P.K. Jain Member (Technical)

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