By TIOL News Service

MUMBAI, AUG 25, 2016: THIS is a Revenue appeal filed more than a decade ago.

The respondent is a manufacturer of "monoliths/signages" and during April 1999 to December 2003 cleared the goods on payment of duty to the sites of BPCL and IOCL and erected and commissioned the same as per the contract.

The respondent had recovered freight charges on account of bringing such goods and also charged various amounts for erection, commissioning, installation and third party inspection charges.

It is the case of the Revenue that these charges have to be included in the value for discharge of central excise duty.

The original authority confirmed the demand but the Commissioner(A) set aside the same and hence the CCE, Mumbai-IV filed an appeal before the CESTAT.

The AR submitted that the goods, which are described as monoliths, are in fact packed in bundles and cleared in packages form which would mean that they are not monoliths or signages but parts and components; that the charges for erection and commissioning and for pre-delivery inspection charges, which has been collected by the respondent are includible in the AV as post July 2000, transaction value regime came onto the scene. Board's circular dated 1.7.2002 which clarified that amounts collected for erection, installation and commissioning charges are includible in the assessable value for discharge of excise duty is also relied upon.

The respondent submitted that the issue is covered in their favour by the decisions in Apollo Tyres Ltd. - 2003-TIOL-11-CESTAT-BANG and Thermax Ltd. - 2002-TIOL-205-SC-CX.

The Bench observed -

"6. On perusal of the sample invoices and the contract entered by the respondent with BPCL and IOCL, we find that the invoice prepared by the respondent clearly indicates the goods which were cleared were described as "monoliths" in knocked down condition (CKD). The discharge of duty liability is also on the entire value of monoliths/signages. This would indicate that what was cleared from the factory premises of the respondent was a complete monolith. The contract specifically indicates that erection and commissioning of the said monolith can be undertaken by the respondent for an additional payment. It is nowhere indicative in the contract that the respondent was obliged to do the said installation and erection and no one else was to be appointed for such work. In the absence of any restrictive clause in the agreement, we find that the amount received by the respondent towards erection/installation/commissioning charges are not includible in the assessable value so also the amounts received for pre-delivery inspection charges, as these charges are not attributable for manufacture of goods."

Holding that the impugned order is correct and legal and did not suffer from any infirmity, the Revenue appeal was rejected.

(See 2016-TIOL-2187-CESTAT-MUM)