Full Judgment
2. Arguing for the appellants, Shri Vivek Kohli, learned Advocate, submits that only point to be considered in this case is whether profit made on erection and commissioning work is required to be added to the assessable value. He submits that it is settled position now that installation, erection and commissioning charges for equipment installed at customer's premises is not to be included in the assessable value. In this context, he relied upon the decision of the Apex Court in the case of Thermax Limited v. Collector of Central Excise, reported in 1998 (99) E.L.T. 481 (S.C.). He submits that any profit made out of such charges is also not to be included in the assessable value. In support of this contention, he referred to the decision of the Tribunal in the case of Boving Fouress Ltd. v.Commissioner of Central Excise, Bangalore, reported in 1998 (102) E.L.T. 94.
3. Shri S.P. Rao, learned DR, countering the arguments submitted that it is not clear from the order whether difference in the installation charges is of profit or otherwise. However, the Commissioner has added difference between the actual expenditure and the receipt from the customers.
4. We have carefully considered the matter. As can be seen from the record, the Commissioner in the impugned order has observed that in the show cause notice now under consideration the allegation is that though the party during the period 1990-91 and 1991-92 incurred a total expenditure only of Rs. 1,14,93,991/- on the installation and commissioning of their telecom systems and telephone exchanges at their customer's premises, they charged a sum of Rs. 1,30,63,389/- from them on this account. Thus, the party has collected a sum of Rs. 15,69,398/- more than the actual expenditure incurred by them on installation and commissioning of telecom systems and telephone exchanges. The view of the department is that this sum should constitute a part of the assessable value for the purpose of charging duty on the telecom systems manufactured and commissioned by the party. In the case of Boving Fouress Ltd., it is clearly held that profit made on erection and commissioning work and besides profit on the manufactured product, assessee earns profit on the work of erection and commissioning, same cannot be, without anything more, be regarded as part of the price for the manufactured product. Since the erection and commissioning work are considered to be post manufacturing activity, any profit in connection with the post manufacturing activity, cannot be considered as part of the assessable value as it was rightly argued on behalf of the assessee. In the facts and circumstances and taking into consideration of the case law referred to above, we hold that profit on erection and commissioning work cannot be added to the assessable value.
Accordingly, the appeal succeeds on this issue.