ITEL INDUSTRIES Vs. CCE

JUDGEMENT

(1.) THE issue arising in this case relates to valuation of telephone instruments cleared by the appellants to M/s. Mahanagar Telephone Nigam Ltd. (MTNL, for short) and M/s. Bharat Sanchar Nigam Ltd. (BSNL, for short) during the period Feb. 2001 to June, 2002. The appellants were supplying telephone instruments in bulk to MTNL and BSNL on contract basis, apart from selling the goods to the general public. In respect of the sales made to MTNL and BSNL during the above period, they had paid duty as assessed under Section 4A of the Central Excise Act availing 40% abatement on the contract price. The Department, after observing that MTNL and BSNL, which provided the telephone instruments to their subscribers on rental basis thereby retaining ownership of the instruments with themselves, did not make any retail sale of the goods, took the view that the instruments removed by the appellants to MTNL and BSNL should be assessed to duty in terms of Section 4 of the Act and not in terms of Section 4A of the Act. On this basis, the provisional assessments for the above period were finalised by the original authority and a demand of differential duty of Rs. 34,69,403/ - was raised on the assessee. This demand was contested by the assessee in an appeal to the Commissioner (Appeals). That appeal was rejected. Hence the present appeal.

(2.) AFTER examining the records and hearing both sides, we find that a similar demand of duty raised on the same assessee for an earlier period (Mar. 2000 to Jan. 2001) was set aside by the Tribunal in ITEL Industries Pvt. Ltd. v. Commissioner of Central Excise, Calicut wherein the telephone instruments (with MRP indicated thereon) supplied in bulk by the assessee to Deptt. of Telecommunications (DOT, for short) and MTNL on contract price were held liable to be assessed to duty of excise under Section 4A of the Central Excise Act. The ratio of the decision rendered by the Tribunal in the said case is contained in para 22 of its order, which is extracted below: