Central Excise Duty: Applicable Only on Manufactured Goods, Not Bought-Out Accessories.

The court held that central excise duty is applicable only to goods manufactured by the assessee and not to bought-out accessories, even if essential. The orders imposing duty on the entire supply, including accessories, were set aside as unsustainable. The appeals by M/s. Electronics Corporation of India Ltd. (ECIL) were allowed, with any necessary relief to be granted to the appellant.

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Issues involved: Central Excise valuation dispute regarding Air Traffic Control System (ATC) supplied by M/s. Electronics Corporation of India Ltd. (ECIL) to various entities.

Central Excise Assessment Issue:
The dispute centered around whether the entire supply of ATC system, including accessories, should be subjected to duty under Heading 85.25, or if duty liability should be restricted to the goods manufactured by ECIL, such as VHF transmitters, receivers, and remote control.

During the hearing, it was argued that excise duty is a levy on manufacture, and therefore, duty liability should only apply to goods manufactured by the assessee, not those supplied. Reference was made to the Tribunal's decision in the case of Fuse Base Eltoro Ltd., emphasizing that bought-out accessories, no matter how essential, cannot be considered part of the manufactured machine for duty purposes. Another case, Super Electronics v. C.C.E., Meerut, was also cited in support of this argument.

Upon review of the submissions and records, it was concluded that central excise duty is limited to goods manufactured by the assessee. Bought-out accessories, even if essential, cannot be subjected to duty. The impugned orders, which sought to levy duty on the entire supply including accessories, were deemed unsustainable and set aside. The appeals by ECIL were allowed, with any consequential relief to be provided to the appellant.

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