2017 (8) TMI 1156 - AT - Central Excise

CESTAT Chennai Rules in Favor of Devi Polymers: Bought-Out Items Excluded from Excise Duty

M/s. Devi Polymers (P) Ltd. Versus Commissioner of Central Excise, Chennai-IV

The Appellate Tribunal CESTAT CHENNAI ruled in favor of the appellant, M/s. Devi Polymers (P) Ltd., and its Executive Director, against the demand of ... Valuation - includibility - value of bought out items - whether the value of bought out components such as, nuts and bolts etc., which are supplied along with panels manufactured by the assessee are required to be included for the purposes of charging excise duty? - Held that: - excise duty is leviable on goods manufactured. The bought out items in the present case have been supplied along with the goods manufactured in the factory only for convenience of the customers for the purpose of erection and installation - similar issue decided in the case of Commissioner of Central Excise, Trichy Vs Neycer India Ltd. [2015 (5) TMI 494 - SUPREME COURT], where it was held that the Tribunal has rightly declined to add the value of the aforesaid components which are not the part of flushing cistern manufactured by the assessee - appeal allowed - decided in favor of appellant. Issues:1. Inclusion of value of bought out items in assessable value for excise duty payment.2. Rejection of refund claim for excise duty paid on bought out items.Issue 1: Inclusion of value of bought out items in assessable value for excise duty payment:The case involved M/s. Devi Polymers (P) Ltd. and its Executive Director appealing against the demand of excise duty for including the value of bought out items required for assembling water tanks along with panels manufactured by the appellant. The Department contended that the bought out items and panels together formed water tanks cleared in CKD condition. The original adjudicating authority confirmed the demand for excise duty and imposed penalties. The Commissioner (Appeals) upheld the decision. The appellant challenged this order through Appeal Nos.E/00294, 00295/2007. Additionally, the appellant started including the value of bought out items from 2004-05 and paid Central Excise Duty, later filing a refund claim for the amount paid during 01.04.2003 to 30.06.2004, which was rejected. The issue was whether the value of bought out items should be included for excise duty. The appellant argued that bought out items used for installation are not liable to be included in the value of manufactured products, citing relevant legal precedents. The departmental representative argued in favor of including bought out items in assessing excise duty, citing a Supreme Court decision. The Tribunal held that excise duty is leviable on manufactured goods, and bought out items supplied for convenience of customers for erection and installation need not be included in the assessable value, referencing a Supreme Court case Commissioner of Central Excise, Trichy Vs Neycer India Ltd. The Tribunal allowed the appeals and set aside the impugned orders.Issue 2: Rejection of refund claim for excise duty paid on bought out items:The appellant filed a refund claim for the excise duty paid on bought out items during a specific period, which was rejected by the original authority. The Commissioner (Appeals) upheld the rejection in Order-in-Appeal No.3/2006 (M-IV), dated 19.01.2006. The appellant challenged this decision through Appeal No.E/00240/2006. Since the issue was the same as the first appeal, all appeals were taken up together for a common decision. The Tribunal, after considering the arguments from both sides, concluded that the value of bought out items need not be included in the assessable value for excise duty payment. Therefore, the Tribunal allowed the appeals and set aside the impugned orders.In summary, the Appellate Tribunal CESTAT CHENNAI ruled in favor of the appellant, M/s. Devi Polymers (P) Ltd., and its Executive Director, against the demand of excise duty for including the value of bought out items required for assembling water tanks along with panels manufactured by the appellant. The Tribunal held that bought out items supplied for customer convenience need not be included in the assessable value for excise duty payment, citing relevant legal precedents and a Supreme Court decision. Additionally, the Tribunal allowed the appeal regarding the rejection of the refund claim for excise duty paid on bought out items during a specific period, setting aside the impugned orders in both cases.