BAIJ NATH VERMA Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) IN this appeal of the Department, an order of the appellate Commissioner holding certain supervision charges to be excludible from the assessable value of goods used by the respondents for erection, at customer's site, of a certain "system" is under challenge. According to the appellant, the Board's Circular No. 58/1/2002 -CX dated 15.1.02 (issued under Section 37B of the Central Excise Act) relied on by ld. Commissioner (Appeals) is not applicable to the period of dispute (1.7.2000 to 31.3.2001). It is stated that, in terms of the new definition of "transaction value" under Section 4 of the Act, supervision charges collected by the respondents for the erection and commissioning of the "system" (not named in the appeal) are to be included in the transaction value for the purpose of payment of duty. Ld. SDR reiterates this argument and points out that, in another order passed by the appellate Commissioner almost simultaneously in the case of another party, similar charges were held to be includible in the assessable value. A copy of the order -in -appeal referred to by the SDR is available on record. Ld. Counsel for the respondents submits that the Department has not challenged the appellate Commissioner's finding that the erected/commissioned system is immovable and hence not excisable. Para 10 of the impugned order, referred to by the Counsel is reproduced below:

(2.) AFTER considering the submissions, we find that the above finding of the ld. Commissioner (Appeals) is not under challenge. The supervision charges under reference were incurred, admittedly, in connection with the installation (erection) and commissioning of the so -called "system". These charges were relatable to the "system" erected and commissioned by the respondents at the customer's site and not to any of the components used therefor. Thus it appears that the supervision charges would not get included in the transaction value as defined under the amended Section 4. Had the supervision charges been incurred in respect of manufacture of the components, perhaps, the situation would have been different. The Board's clarification under point No. 10 in circular No. 643/34/2002 -CX dated 1.7.2002 produced by the Counsel is also apparently supportive of the view taken by us. This clarification reads as under: If the final product is not excisable, the question of including these charges in the assessable value of, the product does not arise. As for example, since a Steel Plant, as a whole, is an immovable property and therefore not excisable, no duty would be payable on the cost of erection, installation and commissioning of the steel plant. Similarly, if a machine is cleared from a factory on payment of appropriate duty and later on taken to the premises of the buyer for installation/ erection and commissioning into an immovable property, no further duty would be payable. On the other hand if parts/components of a generator are brought to a site and the generator erected/installed and commissioned at the site then, the generator being an excisable commodity, the cost of erection, installation and commissioning charges would be included in its assessable value. In other words if the expenditure on erection, installation and commissioning has been incurred to bring into existence any excisable goods, these charges would be included in the assessable value of the goods. If these costs are incurred to bring into existence some immovable property, they will not be included in the assessable value of such resultant property.

(3.) IN the result, the impugned order is sustained and the appeal is dismissed.