2003 (2) TMI 135 - AT - Central Excise

Tribunal rules AC adaptor not integral to goods should not be included in assessable value

TATA TELECOM LTD. Versus COMMISSIONER OF CENTRAL EXCISE, COCHIN

The Tribunal ruled in favor of the appellant, stating that only items integral to the goods under assessment should be included in the assessable value, ... Valuation (Central Excise) Issues:Dispute over whether the cost of AC adaptor should be included in the assessable value of 1 + 1 system of telephones.Analysis:The appellant, engaged in manufacturing electronic push button telephones, argued that the Power Supply Unit (PSU), specifically the AC adaptor, is not an integral part of the phone system and should not be included in the assessable value of the telephones. They contended that accessories should not be considered in the assessable value, citing various decisions supporting their stance. On the other hand, the Revenue asserted that the AC adaptor is essential for the system's functionality, enabling features like call transfer and secrecy. The Revenue argued that without the AC adaptor, the system would only function as ordinary telephones.During the proceedings, the appellant's counsel highlighted the distinction between accessories and goods, emphasizing that the value of accessories should not be included in the assessable value of the goods. They referenced previous decisions, including those by the Supreme Court and Tribunal, to support their argument. Conversely, the Learned SDR relied on a Tribunal decision stating that the cost of bought-out items supplied along with the machines should be part of the assessable value if they are integral to the machine.Upon reviewing the case law presented by both sides, the Tribunal concluded that only items integral to the goods under assessment should be included in the assessable value, not accessories. The Tribunal noted that while accessories enhance convenience and utilization, they remain distinct from the main machine. In this case, the AC adaptor, being a common accessory used with various electrical equipment, was deemed valuable for multiple machines but not an integral part of any specific machine. The Tribunal found in favor of the appellant, citing a previous decision that supported their position.As a result, the appeal was allowed in favor of the appellant, with any consequential relief granted to them.