TaxTMI 
TaxTMI 
2014 (2) TMI 326
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....rilling Rig and Mud Pump and cleared the said drilling rigs on payment of full excise duty on the value of the same in accordance with Section 4 of the Central Excise Act. The appellant also manufactured certain goods which were not part of the rigs, but were drilling tools, accessories or operating equipment to be used in conjunction with the rig on payment of duty. They also purchased and sold certain goods which were not parts of the rigs, but were drilling tools, accessories or operating equipment and were used in conjunction with the rigs. These are goods such as drill pipes, drill bits, substitutes, slips, spiders/spider bushings, drill collars, casing elevators, fishing tools, traveling blocks, generator/welding sets etc. The same we....
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....mounted to essential parts of rigs and had cleared the same in the guise of accessories to evade payment of excise duty. The appellant was therefore called upon to show cause as to why excise duty of Rs.86,16,363/- for the period December, 1987 to September, 1992 should not be recovered under the proviso to Section 11A and why penalty should not be imposed. Thereafter, the department issued 8 more show-cause notices between June, 1993 and January, 1997 on similar allegations and seeking to recover excise duty of Rs.10,90,571/- (in aggregate) on the said bought-out items on the same ground. (iii) The appellant contested the said show-cause notices contending that the said drilling rigs were commercially complete and marketable ....
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....ts of a rig are a mast. The cost of mast therefore would be included. However, the delivery hose, stand pipe, suction hose, bush, those goods which are classifiable as parts of rig falling in chapter heading 84.31, the cost of the goods could be included in the value of the rig, unless the appellant were able to show that they were supplied not incorporated in the rig but as spare part, the value of such was not included in the price of the rig. The price of the goods which are clearly not required for the manufacture of the rig would not be included. We think it appropriate that the precise determination of the value of the rig can be carried out by the adjudicating authority by applying the principles that we have set out above to various....
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....(T) which was confirmed by the Hon'ble Apex Court in Civil Appeal No. 4371 of 1994 vide order dated 5.3.1998 wherein the Hon'ble Apex Court held that drill rods/pipes and drill tools etc. are not to be treated as part of the drill rig and value thereof not includable in the assessable value of the drill rig, thereby upholding the decision of the Tribunal. (viii) In view of the order in the Ingersoll Case as confirmed by the Hon'ble Apex Court, the learned Counsel stated in the impugned order that out of total original demand of duty of Rs.99,08,934/-, after making correction for clerical errors, the correct demand comes to Rs.83,37,892/-. Out of this amount, demand of Rs.78,05,109/- relating to drill pipes and drill bits, whic....