Commissioner of Central Excise Vs. Rotomac Electricals (P) Ltd.

Commissioner of Central Excise vs Rotomac Electricals (P) Ltd.

Type Court Judgment Court Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi Decided Jan 11, 2000

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Citation: sooperkanoon.com/17448
Court: Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On: Jan 11, 2000
Subject: Excise

Case Summary

AI-generated summary - not the official court judgment text.

Excise

Key legal issue: Excise

Parties & Advocates

Appellant / Petitioner

Commissioner of Central Excise

Respondent

Rotomac Electricals (P) Ltd.

Legal References

Reported In: (2001)(130)ELT927TriDel

Excerpt

1. the respondents herein manufacture insulating varnish classifying it under cet sub-heading 3208.40. it was noticed that they were also clearing catalyst along with insulating varnish but not paying duty on the catalyst when removed from the factory. the additional commissioner confirmed the duty demand of rs. 3,44,632/- on the quantity of catalyst removed by the respondents and also imposed a penalty of rs. 2 lakhs upon them. the commissioner (appeals) set aside the order of the additional commissioner holding that the value of catalyst which is a bought out item and which is supplied in a separate pack along with insulating varnish, is not includible in the value of insulating varnish for the purpose of payment of central excise duty. hence this appeal.2. we have heard shri h.k. jain, learned dr, who relies upon section note 2 to section vi of the ceta, 1985 to support his contention that since both insulating varnish and catalyst fall under section vi and are complementary to each other, because desired electrical insulating effect cannot be obtained without attaining of catalyst, the value of catalyst is required to be included in the assessable value of insulating varnish and shri b. bhatta-charya, learned advocate who submits that the insulating varnish manufactured by the respondents is a fully manufactured commodity and can be bought and sold without catalyst and that supply of catalyst is optional and he relies upon certain decisions of the tribunal wherein it has been held that value of optional bought out items is not required to be added to the assessable value of the final product manufactured by the assessee.3. we have considered the rival submissions. we find that the stand of the respondents that supply of catalyst is optional has not been rebutted by the revenue and this is a stand taken at the earliest stage, namely in the reply to the show cause notice. in the light of this factual position, the decision of the tribunal in the case of webel.....

Full Judgment

1. The respondents herein manufacture Insulating Varnish classifying it under CET sub-heading 3208.40. It was noticed that they were also clearing Catalyst along with Insulating Varnish but not paying duty on the catalyst when removed from the factory. The Additional Commissioner confirmed the duty demand of Rs. 3,44,632/- on the quantity of catalyst removed by the respondents and also imposed a penalty of Rs. 2 lakhs upon them. The Commissioner (Appeals) set aside the order of the Additional Commissioner holding that the value of catalyst which is a bought out item and which is supplied in a separate pack along with insulating varnish, is not includible in the value of insulating varnish for the purpose of payment of Central Excise duty. Hence this appeal.

2. We have heard Shri H.K. Jain, learned DR, who relies upon Section Note 2 to Section VI of the CETA, 1985 to support his contention that since both insulating varnish and catalyst fall under Section VI and are complementary to each other, because desired electrical insulating effect cannot be obtained without attaining of catalyst, the value of catalyst is required to be included in the assessable value of insulating varnish and Shri B. Bhatta-charya, learned Advocate who submits that the insulating varnish manufactured by the respondents is a fully manufactured commodity and can be bought and sold without catalyst and that supply of catalyst is optional and he relies upon certain decisions of the Tribunal wherein it has been held that value of optional bought out items is not required to be added to the assessable value of the final product manufactured by the assessee.

3. We have considered the rival submissions. We find that the stand of the respondents that supply of catalyst is optional has not been rebutted by the Revenue and this is a stand taken at the earliest stage, namely in the reply to the show cause notice. In the light of this factual position, the decision of the Tribunal in the case of Webel Telecommunication India Ltd. v. Commissioner of Central Excise - 1987 (32) E.L.T. 453 and National Radio and Electronics Company Ltd. v.Commissioner of Central Excise, Bombay - 1995 (76) E.L.T. 436 in which it has been held that cost of optional bought out items is not includible in the assessable value of the final product, is directly applicable. The Tribunal's decision in the case of Nichrome Metal Works - 1996 (88) E.L.T. 448 relied upon by the learned DR is distinguishable from the facts of the present case since in that case, there was no evidence that supply of bought out items was optional and that it was only a trading activity.

4. Following the ratio of the Tribunal's order in the case of Webel and National Radio cited supra. We hold that there is no infirmity in the impugned order, uphold the same and reject the appeal.

Same Court & Year Customs Excise and Service Tax Appellate Tribunal CESTAT Delh... Same Parties Commissioner of Central Excise vs Rotomac Electricals (P) Ltd. Same Subject Excise