BHARAT ELECTRONICS LTD Vs. CCE

JUDGEMENT

(1.) THE appellant is a Public Sector Undertaking who have obtained permission to pursue the appeal. This appeal arises from Order -in -Original dated 26.6.1991 passed by the Collector of Central Excise, Bangalore confirming the duty demand of Rs. 13,05,000/ - on the technical know -how and assistance charges towards specification of equipment (goods), charges towards drawings and specification and installation and Commission charges under Proviso to Section 11A of Central Excise and Salt Act, 1944 on the goods supplied to M/s. Suchitra Tubes Ltd. and a penalty of Rs. 1,25,000/ - has also imposed.

(2.) COMMISSIONER has noted that appellant had entered into an agreement with M/s. Suchitra Tubes Ltd. for sale of machinery viz. 'machineries and equipments' with specific functions. Appellants admitted that the agreements included payment towards goods manufactured and supplied and other payments towards technical know -how, assistance charges, charges towards specification of equipment/goods, charges towards drawings, specification charges towards installation and commissioning of equipment. He has noted from the records that the above said charges are for transfer of technical know -how and technical assistance, charges towards specification of equipments/goods, charges towards drawings, specifications charges towards installation and commissioning of equipment. He has noted that the assessable value as determined by the party is on the sale price and the above consideration had not been included in the assessable value. After perusing the agreement between them, he noted that it revealed that the sale price is not independent but had also relation with extra consideration which is mandatory as per the terms and contracts of the agreement. He noted that Section 4(1) of C.E. Act specify that where duty of excise is chargeable on any excisable goods, with reference to the value, such value shall be deemed to be the normal price at which goods are ordinarily sold by the assessee to a buyer in the wholesale trade. He noted that where the sale price was not represented on the sole consideration for sale, Rule 5 of Central Excise Valuation Rules, 1975 prescribes that the value of such gd64s shall be based on the aggregate value of such prices and any other additional consideration flowing directly or indirectly from the buyer to the seller, is required to be added, hence he upheld the allegation of addition of these charges in the assessable value and concluded that the same has not been added in the declared price, hence appellants are required to pay the same. He has noted that larger period is invokable in the present case.

(3.) SHRI V.T. Thomas, Dy. General Manager appearing on behalf of the appellants argued both on merits as well as on time bar. The appellants have also filed written submissions. It is pointed out that the agreement between them and M/s. Suchitra Tubes Ltd. was for manufacture of black and white type picture tubes entered on 30.7.1985. The agreement was for supply of special equipment fabricated by them and that would be to the extent of 302.30 lakhs. The know -how charges and technical assistance was Rs. 50 lakhs and Consultation/Execution/Installation/Commissioning charges was Rs. 50 lakhs. There was also service equipment/test equipment of a value of Rs. 51.15 lakhs. It is stated that in the show cause notice there is a reference to receipt of Rs. 87 lakhs and know -how charges during the years of 1985 -86, 1986 -87, and 1987 -88 and they were called upon to pay Rs. 13.05 lakhs as excise duty. It is stated that the dispute was only pertaining to valuation and the show cause notice did not allege fraud or suppression in the statement and show cause notice itself indicated and relied on the documents regarding turnkey project which had been made available to the department like (i) Purchase orders placed by Suchitra Tubes on the appellants; (ii) Agreement signed by the appellants and M/s. Suchitra Tubes covering all conditions of the agreement. He pointed out that the Commissioner himself has referred to the records pertaining to this documents and had held that the appellants had failed to determine the correct duty liability. They state as these facts had been clearly brought to the notice of the department at the time of filing the price list and confirmation of the list, therefore, question of invoking larger period in the matter does not arise. In this regard, following judgements are relied: