1994 (1) TMI 151 - AT - Central Excise

Tribunal includes battery value in UPS assessable value, deeming it essential for uninterrupted power supply

The Tribunal upheld the Collector of Central Excise's decision to include the value of the battery in the assessable value of the uninterrupted power ... Assessable value - integral part - bought-out components - assembly constituting manufacture - full commercial value - uninterrupted power supply (UPS)Assessable value - integral part - bought-out components - uninterrupted power supply (UPS) - Value of the battery is includible in the assessable value of the uninterrupted power supply system. - HELD THAT: - The battery, whether in an off-line or on-line UPS, is an integral and indispensable component which provides the 'uninterrupted' character to the UPS by automatically taking over when the AC mains fail and being recharged thereafter; the UPS cannot sustain its uninterrupted function without the battery (paragraph 11). The Tribunal applied the principle that the assessable value of the finished excisable product includes the full commercial value of components used to bring the final product into being, even if such components are bought-out or supplied separately (paragraphs 15-17, 18). Reliance on Narne Tulaman was held appropriate where separately sourced components are assembled to function as a single machine; the present facts show batteries were procured through the appellants, invoiced to customers as part of the UPS contract and physically integrated (paragraphs 8-9, 18). The existence of exemption notifications for certain components does not preclude inclusion of their value when they form part of a dutiable finished product; what is charged to duty is the final product (paragraph 19). Applying these principles, the value of the battery is rightly includible in the assessable value of the UPS system. [Paras 11, 15, 16, 18, 19]The value of the battery forms part of the assessable value of the UPS system and must be included in assessing excise duty.Final Conclusion: Appeal dismissed; the impugned order confirming inclusion of the battery's value in the assessable value of the UPS system is upheld. Issues involved:The inclusion of the value of the 'Battery' in the assessable value of the 'uninterrupted power supply' system.Summary:The case involved M/s. Kerala State Electronics Development Corp. Ltd. manufacturing uninterrupted power supply (UPS) systems. The dispute arose when the value of the stationary storage battery, an integral part of the UPS system, was not included in the assessable value. The Collector of Central Excise held that the value of the battery should be part of the assessable value based on the Supreme Court decision in Narne Tulaman case.The appellants argued that the battery was a bought-out item and not essential for the UPS system to function without interruption. They cited cases where the value of optional accessories or bought-out items was not included in the assessable value of the main product. The respondents contended that the battery was crucial for the UPS system to provide uninterrupted power supply, referencing various decisions where essential parts were included in the assessable value.After considering the arguments, the Tribunal found that the battery was an integral and indispensable part of the UPS system, providing uninterrupted power supply during interruptions. The contracts with customers included the supply of batteries, and even extra charges were levied for increasing battery capacity. The Tribunal emphasized the importance of the battery in maintaining continuous power supply in industries sensitive to power interruptions.The Tribunal rejected the appeal, confirming that the value of the battery should be included in the assessable value of the UPS system, as it was an essential component for ensuring uninterrupted power supply. The decision aligned with previous rulings emphasizing the inclusion of essential components in the assessable value of the final product.This summary highlights the key arguments and findings in the judgment regarding the inclusion of the battery value in the assessable value of the UPS system.