GARLICK ENGINEERING Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) APPELLANT engaged in the manufacture, supply, erection and commissioning of Electric Overhead Travelling Cranes (EOT Cranes), was following the procedure in Notification No. 120/75 and paying duty on the price collected under various invoices issued to buyers. The dispute in this appeal relates to the period from 1 -4 -1984 to 30 -9 -1985. Show cause notice dated 3 -3 -1988 was issued alleging that during the period in question, besides the price collected under the invoices, appellant had collected various amounts by way of charges for design, engineering, transportation and commissioning under separate debit notes which were suppressed from the scrutiny of the Department, that these charges should have been shown in the invoices and would be part of the assessable value and duty should have been paid thereon and proposing demand of differential duty on that basis invoking larger period of limitation under the proviso to Section 11A of the Central Excise Act, 1944. Though the appellant resisted the notice on merits and on the ground of limitation, the Collector of Central Excise confirmed the demand. Hence, the present appeal.

(2.) THERE is no dispute that the design and engineering charges collected by the appellant from buyers, under separate debit notes, related to the particular EOTs designed and manufactured by the appellant for the particular buyers according to the specifications of those buyers. EOTs are not standard goods manufactured for general use or available across the shelf. They are highly sophisticated goods made to the specifications of the buyers. Therefore, the goods cannot be manufactured unless the design and engineering is planned and implemented. Necessarily, the charges therefor must be part of the assessable value under Section 4(1)(a) of the Act.

(3.) ACCORDING to the learned Counsel, since the appellant was availing benefit of Notification No. 120/75, the benefit of exemption in excess of the price shown in the invoices would be available. Learned Counsel placed reliance on the decision in Texmaco Ltd. -1995 (77) E.L.T. 501 (S.C.). In that case, the appellant availing the benefit of Notification No. 120/75 was receiving wheel sets free of cost from the buyer, namely, Railways and the invoices showed only the fabrication charges relating to wagon bodies. The Supreme Court held that the notification was intended to grant exemption in relation to the value in excess of the invoice value and, therefore, the cost of wheel sets supplied free of cost by the Railways cannot be regarded as dutiable. We do not think the decision applies to the facts of the present case. Even in Texmaco Ltd. case if the Railways had not supplied wheel sets free of cost and the appellant was required to buy the same, the invoice price would have been much more than the actual invoice price shown in that case. There cannot be any dispute that the invoice price under Notification No. 120/75 must correspond to the assessable value under Section 4(1)(a) of the Act. If the invoice includes certain elements which are deductible for the purpose of Section 4 of the Act, the mere mention of these elements in the invoices will not result in those elements becoming dutiable. Similarly, if the invoice omits certain elements which would otherwise be includible in the assessable value under Section 4 of the Act, the mere omission of these elements in the invoice cannot lead to non -dutiability of those elements or exemption in respect of those elements. If it were not so, it would be open to anyone availing the benefit of the notification to deliberately reflect in the invoices only a part of the real price and claim exemption in regard to the balance not reflected in the invoices; that cannot be result of the notification.