MCNALLY BHARAT ENGG. CO. LTD. Vs. CCE

JUDGEMENT

(1.) This appeal arises from Order -in -Appeal No. 116/2002 dated 23.7.2002 by which the Commissioner (Appeals) has rejected the appellant's plea that the service charges collected by them independently under different contract from the Public Sector Undertaking, namely, Neyveli Lignite Corporation is not includible in the assessable value as per Section 4 of the Central Excise Act. The Commissioner has taken the view that in terms of definition of 'Transaction Value' under Section 4(3)(d), the amounts collected by the appellants through four invoices is liable for being charged with duty and duty claim of Rs. 1,98,600 confirmed by the original authority has been upheld. The show cause notice dated 21.6.2001 states that appellants are manufacturers of shiftable conveyors, bucket wheel excavator, spreader falling under chapter heading 84 of the Central Excise Tariff Act, 1985. These items were supplied to the NLC as per the contract entered into between them. It is stated that apart from the manufacture and supply of the above -mentioned items, they had entered into contract for erection supervision, testing and commissioning including performance of take over test and long term performance test for the items mentioned below:

(2.) It is stated that in terms of Section 4 of the Act, the amounts collected in the four invoices dated 2.1.2001, 27.3.2001, 26.2.2001 and 1.2.2001 are liable to be assessed and for inclusion of such service charges. However, the show cause notice does not mention about inclusion in the earlier assessed sums and under what heading it should be added. It also does not state as to whether the assessment is pertaining to earlier supplies and as to whether they were to be re -assessed by reopening assessment by invoking proviso to Section 11 of the Act. There is no allegation of suppression or misstatement etc. Therefore, the appellants contended that the show cause notice itself is vague and it does not relate to any assessment and any payment already made on which service charges were to be included. They contended that the contracts were completed in the year 1997 to 1998 in respect of part supplies of the items mentioned in SI. Nos. 1, 2 and 3 of the show cause notice for which the supervision and erection was carried out independently by the appellants with their Supervisors; while the entire work was carried out by the NLC by purchasing the items from various people and with involvement of other contractors. There was no involvement of appellant in erection of three items mentioned in the show cause notice. Therefore, the question of including it in any aspect of supplies does not arise. They also contend that service charges is also not includible in the assessments made under Section 4 whichever it might be in terms of judgment. rendered by Apex Court in the case of O.R.G. Systems v. CCE, Vadodara, 1998 (61) ECC 443 (SC) : 1998 (102) ELT 3 (SC) and that of the Tribunal rendered, in the case of CCE and C Pune, Nichrome Metal Works P. Ltd., 2001 (135) ELT 429 and that of Daya Engg. Works (Sleeper) Ltd v. CCE, Jaipur, 2003 (158) ELT 819 (T -Del).

(3.) We have heard Ld. Advocate Shri K.S. Venugopalan for the appellant and Smt. R. Bhagya Devi, Ld. SDR for the respondent.