Tribunal modifies order on design charges inclusion in assessable value, remands for duty liability calculation.

The Tribunal allowed both appeals in the case concerning the inclusion and apportionment of drawing and design charges in the assessable value of manufactured components. The impugned order in one appeal was set aside, and in the other, the order was modified. The matter was remanded for determining duty liability on the value of drawing and designing charges for manufactured components with a 50% abatement for general drawing and designing charges unrelated to component supply. A nominal penalty was confirmed. This resolution provided closure to disputes spanning over two decades.

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Issues:
1. Inclusion of drawing and design charges in the assessable value of manufactured components.
2. Apportionment of drawing and design charges between manufactured and bought out components for duty calculation.
3. Dispute regarding general drawing and designing charges not related to supply of goods.

Analysis:

Issue 1: Inclusion of drawing and design charges
The appellant-assessee, engaged in manufacturing and supplying boiler systems, faced a dispute with the department regarding the inclusion of drawing and design charges in the assessable value of the manufactured components. The department proposed to charge duty on these charges, leading to appeals by both parties.

Issue 2: Apportionment of drawing and design charges
In Appeal No.E/467/04, the lower appellate authority had dropped the demand for duty, which was contested by the department. In Appeal No.E/756/04, the adjudicating Commissioner apportioned the drawing and design charges between manufactured and bought out components for duty calculation. The appellant-asseessee were not contesting this apportionment but raised concerns about the general drawing and design charges unrelated to the supplied components.

Issue 3: Dispute over general drawing and designing charges
The appellant-asseessee contended that the adjudicating Commissioner had ignored the part of drawing and design charges related to general drawing and design of the plant at the client's premises, which was not linked to the components supplied. Both parties agreed to apportion the charges in a 50:50 ratio for general drawing and designing charges and those attributable to manufactured and bought out components.

The Tribunal accepted the proposal from both sides to resolve the long-pending disputes. The impugned order in Appeal No.E/467/04 was set aside, and in Appeal No.E/756/04, the order was modified. The matter was remanded to the original authority to determine the duty liability on the value of drawing and designing charges for manufactured components after allowing 50% abatement towards general drawing and designing charges unrelated to the supply of components. The penalty imposed in Appeal No.E/756/04 was confirmed for a nominal amount.

In conclusion, both appeals were allowed based on the agreed terms for apportioning drawing and design charges, providing a resolution to the disputes pending for over two decades.

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