1987 (10) TMI 151 - AT - Central Excise

Tribunal: Co-axial feeder cables not essential components in Walkie Talkie sets

The Tribunal allowed the appeal, finding that the co-axial feeder cables supplied with Walkie Talkie sets were not essential components and could be sold ... Valuation Issues Involved: Central Excise duty assessment on co-axial feeder cables supplied with Walkie Talkie sets and spare parts thereof.Summary:Issue 1: Assessment of Central Excise Duty on Co-axial Feeder CablesThe appellants manufactured Walkie Talkie sets and supplied co-axial feeder cables to customers. The Central Excise department observed duty payment on these cables. The appellants contended that the cables were purchased from outside sources and not manufactured by them, and that the base station could be sold without the cables.Issue 2: Assistant Collector's DecisionThe Assistant Collector, considering the common invoicing of base stations and cables, demanded duty, stating that separation of prices was not feasible under the opted procedure.Issue 3: Collector (Appeals) DecisionThe Collector (Appeals) noted that the cables were supplied with the sets to connect antenna to transceiver, deeming them essential parts. He upheld the duty demand based on the necessity of the cables for the equipment.Issue 4: Appellants' ArgumentsThe appellants' advocate argued that the cables were bought-out items for trading, not essential inputs for the final product, and could be sold separately from the base stations and Walkie-Talkies.Issue 5: Previous Order-In-AppealReference was made to a previous order where the Collector held that the cable was not an essential accessory of the product manufactured by the appellants.Issue 6: Respondent's ArgumentsThe Respondent's representative cited a Tribunal judgment on water coolers to argue that the cable should be considered part of the equipment, emphasizing its role in connecting the antenna to the walkie talkie set.Issue 7: Tribunal's DecisionAfter considering arguments and invoices, the Tribunal found that the equipment could be sold without the cable, indicating it was not essential. The Tribunal also noted the appellants treated the cables as bought-out items for trading, not integral to manufacturing activities, leading to the appeal being allowed.This judgment highlights the importance of assessing the essentiality of components in determining excise duty liability and the distinction between integral parts and optional accessories in the valuation of manufactured goods.