Tribunal rules installation charges exempt from duty if service tax paid

The Tribunal ruled in favor of the appellant, setting aside the demand of duty and penalty for supply of internet nodes and installation/commissioning services. It held that installation and commissioning charges should not be added to the assessable value for duty payment if service tax has already been paid on these charges. The Tribunal distinguished between the activities of supply and installation/commissioning, stating that paying service tax on the latter exempts it from Central Excise duty. The appellant's appeal was allowed, providing consequential relief.

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Issues:
1. Demand of duty and penalty confirmed against the appellant for supply of internet nodes and installation/commissioning charges.
2. Whether installation and commissioning charges should be added to assessable value for duty payment.
3. Applicability of Central Excise duty when service tax already paid on installation and commissioning charges.

Analysis:
1. The judgment addressed the demand of duty amounting to Rs. 4,67,360 against the appellant, along with an equal penalty, for their contract with M/s BSNL involving the supply of internet nodes and installation/commissioning services. The Revenue contended that charges for installation and commissioning should be included in the assessable value of the nodes for duty payment.

2. The appellant argued that the installation and commissioning activity was distinct from the manufacturing activity and that they had already paid service tax on the consideration received for these services. Citing a previous Tribunal order in a similar case, the appellant contended that activities for which service tax was paid should not attract Central Excise duty.

3. The Tribunal agreed with the appellant's submissions, noting that the contract with M/s BSNL involved two separate activities: supply of goods and installation/commissioning. The Tribunal highlighted that the installation and commissioning could have been outsourced to a third party, and the fact that the supplier undertook these activities did not automatically require adding their charges to the assessable value of the goods. Moreover, since the appellant had already fulfilled their service tax liability on the installation and commissioning charges, the Tribunal ruled that such charges cannot be subjected to Central Excise duty.

4. Consequently, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant and providing consequential relief. The judgment clarified the distinction between the activities of supply and installation/commissioning, emphasizing that payment of service tax on the latter precludes the imposition of Central Excise duty on the same consideration.

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