S.S.KANG,VICE -PRESIDENT - (1.) HEARD both sides.
(2.) APPELLANT filed this Appeal against the impugned order passed by the Commissioner of Central Excise whereby the duty of Rs. 36,81,437.00 (Rupees Thirty Six Lakhs Eighty One Thousand Four Hundred and Thirty Seven only) is confirmed and penalty of the equal amount is imposed on the firm. Shri Ravi Choudhary filed Appeal against the imposition of penalty of Rs. 2,00,000/ -(Rupees Two Lakh only). The Appellants are engaged in the manufacture of tea dryers which are marketed as Tempest Combination Tea Dryers. A Show Cause Notice was issued demanding duty on the ground that the Appellant had dispatched essential component of Tempest Combination Dryer in un -assembled conditions from their factory at Tezpur as well as through their corporate office at Kolkata for re -assembly of the complete dryer at various tea estates and had not paid duty on such activity. The adjudicating authority confirmed the demand on this account and has also confirmed the demand in respect of over -hauling, uprooting, re -installation of converted dryer and commissioning and erection charges by adding to the assessable value of the machine cleared from the factory.
(3.) CONTENTION of Appellant is that they are manufacturing 5 models of the dryers. Whatever is manufactured in the factory appropriate duty is being paid. The Appellants are not paying duty in respect of bought out items which were cleared from the factory as parts of dryer. It is also submitted that main demand is in respect of heaters by treating the same as part of dryer. The heater is not part of the machine manufactured by the Appellant. Sometimes oil fired heaters are manufactured in the factory which are cleared separately on payment of appropriate duty. The heaters are procured from market and supplied directly to the tea estates by their head office whenever such orders are received. The Appellant submitted that in the present case dispute in respect of 73 dryers and Appellants had supplied only 30 heaters as per the requirement of their customers. Therefore the demand in respect of the bought out items which are supplied from head office at Kolkata is not sustainable. Appellant also argued that some of the bought out items which are supplied with the dryer are also not liable to duty. In respect of other charges contention is that sometimes Appellant received orders from their customers for over -hauling/uprooting/re -installation of existing dryer and in some cases where customer desires they are installing dryers at various tea estates and are receiving installation and commissioning charges. The contention is that the demand in respect of such activities is not sustainable as over -hauling, uprooting, re -installation does not amount to manufacture. Installation and commissioning charges are nothing to do with the manufacturing activity and the value of such charges are not to be added to the assessable value of the dryers cleared form the factory. It is also submitted that the installation and commissioning and over -hauling etc. are undertaken at different places some of them outside the jurisdiction of Commissioner of Central Excise, Shillong and during argument Shri Vijay Bagaria, Chairman of Appellant firm assisted the Bench by explaining the procedure regarding manufacture, assembly of the dryers. He submitted that the dryers are assembled in the factory and subject to dry run and thereafter the same are dis -assembled for transportation purposes and mostly the same are cleared in two consignments and only one commercial invoice is being prepared though two different challans covering different consignments are prepared. Learned S.D.R. submitted that Appellant cleared the complete dryers from the factory and pay the duty on certain parts. Their internal invoice shows that certain parts are cleared along with dryer without payment of duty. Learned S.D.R. submitted that a complete dryer is assembled at the different tea estates and value of all the parts are to be added to the assessable value of the complete dryer including installation, commissioning charges. Therefore the demand is rightly made.;