1998 (11) TMI 261

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....side and supplied along with the Capacitors manufactured by them and (2) a demand of Rs. 8 lakhs approximately on account of denial of Small Scale exemption to the appellant in respect of clearances made during the financial year 1991. The impugned order also imposes penalty of Rs. 5 lakhs. 2.Arguing the appeal, Shri V. Lakshmikumaran, ld. Advocate submits that duty demands are not maintainable in law. With regard to the demand of duty of over Rs. 54 lakhs on bought out items, he submits that these items are themselves separate goods assessable to duty under Central Excise Law. These items are Lightening Arrestors, CT, RVTs etc. He submits that these are not components or parts or accessories of Capacitors manufactured by the appellant. ....

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....ear 1989-90. He clarified that these Capacitors had been cleared in January, 1989 vide Gate Pass No. 99, dated 25-1-1989. The goods were subsequently brought back for inspection and later removed in May, 1989 under Gate Pass No. 10 dated 25-5-1989. He submitted that this position remains noted in the show cause notice itself. With reference to the computation of value of clearances for 1989-90, he also submitted that the value of clearances has not been correctly worked out as full deductions towards freight has not been allowed. He submitted that the contract was for supply of the goods on "FOR Destination" basis. In terms of Section 4(2) of Central Excise Act, 1944 deduction of freight is to be made while fixing the value. He submitted th....

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.... in respect of the goods purchased by the appellants from other manufacturers and supplied to their buyers along with the Capacitors manufactured by them. These items are themselves separate machines, appliance etc. with different functions from the Capacitors. That they were supplied along with the goods manufactured by the appellants does not make their value addable to the value of the Capacitors manufactured by the appellants. It is an admitted case, that these items are not parts or components of the Capacitors. The appellants' plea on this point remains covered by the decision of the Hon'ble Supreme Court in the cases of Shriram Bearings and the Computer (sic). Accordingly, the appellants succeed on this point and the demand on this c....