2009 (3) TMI 727 - AT - Central Excise

Tribunal Grants Stay on Demand Pending Appeal in Air Brake Equipment Contract Dispute

KNORR BREMSE INDIA PVT. LTD. Versus COMMISSIONER OF C. EX., FARIDABAD

The Tribunal granted a stay on the demand realization pending appeal in a case concerning the levy of fitting and installation charges in a contract for ... Stay/Dispensation of pre-deposit - Valuation Issues:Levy of fitting and installation charges in a contract for manufacture, supply, and installation of Air Brake equipment for non-AC coaches.Analysis:The appellant received a contract from the Railways for the manufacture, supply, and installation of Air Brake equipment for non-AC coaches. The contract price was clearly outlined, with the main equipment priced at Rs. 48,450 per set and pipe fittings at Rs. 17,500 per set. The appellant had subcontractors for the installation work. The Revenue contended that subcontracting does not absolve the appellant from liability under the contract. However, the Tribunal observed that the contract specifically divided the price into two parts, indicating that the duty liability should not be on the fitting portion value. The Revenue argued that both obligations, supply, and service, are essential elements of the contract value. After hearing both sides, the Tribunal found that the contract could be divisible, and therefore, directed a stay on the demand realization pending the appeal's disposal.In conclusion, the judgment addressed the dispute regarding the levy of fitting and installation charges in a contract for Air Brake equipment. The Tribunal considered the breakdown of the contract price, the subcontracting arrangement, and the essential elements of the contract value. By recognizing the divisibility of the contract, the Tribunal granted a stay on the demand realization until the appeal is resolved.