1995 (1) TMI 158 - AT - Central Excise

Tribunal Excludes Installation Charges from Assessable Value, UPS Systems Remain Excisable Goods

The Tribunal held that installation and commissioning charges are not includible in the assessable value, following precedent. It determined that UPS ... Valuation - Dutiability Issues Involved:1. Whether installation and commissioning charges are to be included in the assessable value.2. Whether UPS System becomes immovable property after installation and assembly at the site or continues to be excisable goods chargeable to duty.3. Whether the cost of bought-out items (Battery and other items) are to be excluded from the assessable value.4. Whether the demand was barred by time in appeal Nos. E/4087/90-A and E/4168/91-A.Summary:1. Installation and Commissioning Charges:It was argued that the installation and commissioning charges are post-manufacturing expenses and have no nexus with manufacturing and marketability. The Tribunal found that these charges are not includible in the assessable value, concurring with the Collector (Appeals) who followed the decision in the case of Sunray Computers (P) Ltd., 1988 (33) E.L.T. 787. Thus, the party succeeds on this issue.2. Immovable Property:The party contended that the UPS, once installed, becomes an integral and inseverable part of the customer's immovable property and hence is not excisable. The Department argued that the UPS system, even after installation, can be dismantled and moved, thus remaining 'goods' and excisable. The Tribunal, agreeing with the Department, held that the UPS system is not immovable property but 'goods' as it is specified in the Schedule and marketed as such, making them excisable goods to attract duty. Therefore, the Department succeeds on this issue.3. Bought Out Items:The party argued that bought-out items like batteries are optional and not integral parts of the UPS system, citing various Tribunal decisions supporting the exclusion of such items from the assessable value. The Department countered that the battery is an essential part of the UPS system, making the system functional, and thus its value should be included. The Tribunal noted conflicting decisions on this issue but found no justification to refer it to a larger Bench. It held that if bought-out items are optional and supplied based on specific customer orders, their value should be excluded. The matter was remanded to the Adjudicating Authority to examine the nature of the contract and determine if the bought-out items were optional.4. Time-Barring Issue:The Tribunal noted the absence of findings by the lower authorities on the issue of time bar. Since the matter was remanded on the issue of optionality of bought-out items, the time-bar issue was also directed to be examined by the concerned Adjudicating Authority.Conclusion:All appeals were disposed of with directions to the Adjudicating Authority to re-examine the issues of optionality of bought-out items and the time-bar issue, providing an opportunity for the party to present their case.