1996 JTR(SC) 1672
1997 91 ELT 255
SUPREME COURT OF INDIA
S.C.Sen : S.P.Bharucha
Shriram Bearings
Versus
Collector Of Central Excise, Patna
Case No. : .
Date of Decision : 10/10/96
Excisable value is determined by the specific Tariff Entry. If items are admitted to be accessories rather than parts of the main product, their value cannot be included in the excisable value of the main product, even if they are fitted at the time of clearance.
Act
Referred
:CENTRAL EXCISE ACT
: S.4
(A) Central Excise - Tariff Entry No. 49 - Value for purpose of excise duty - Ball bearings and accessories - Revenue's contention that composite value of ball bearings fitted with accessories at the time of clearance should be the excisable value - Held, if accessories are not parts of the product and the Tariff Entry specifically covers only the main product, the accessories cannot be included in the excisable value. (Para 3)
(B) Post-manufacturing expenses - Wooden crates for transportation and transit insurance - Issue remanded for determination in accordance with established precedent. (Para 4)
Facts of the case:
The assessee manufactured ball bearings. A dispute arose regarding whether accessories such as snap rings, sleeve lock devices, cup assemblies, oil seals, eccentric collars, and dust shields should be included in the excisable value. The Revenue argued that since the items were removed from the factory fitted with these accessories and quoted as a single item in the price list and invoices, the composite value should be the excisable value.
Findings of Court:
The court found that the Revenue admitted the accessories were not parts of the ball bearings. Since Tariff Entry No. 49 specifically covers rolling bearings (ball or roller bearings), the accessories do not fall under this entry. Regarding post-manufacturing expenses, the matter was remanded for further determination based on existing judicial precedent.
Issues: Whether the value of accessories fitted to ball bearings at the time of clearance should be included in the excisable value under Tariff Entry No. 49, and whether post-manufacturing expenses for packaging and insurance are allowable.
Ratio Decidendi: The excisable value is determined by what falls under the specific Tariff Entry. Since the accessories were admitted to be accessories and not parts of the ball bearings, they do not fall under the entry for rolling bearings, regardless of whether they were fitted at the time of removal or quoted as a composite price.
Result: Appeals are allowed.
(B) Post-manufacturing expenses - Wooden crates for transportation and transit insurance - Issue remanded for determination in accordance with established precedent. (Para 4)
Facts of the case:
The assessee manufactured ball bearings. A dispute arose regarding whether accessories such as snap rings, sleeve lock devices, cup assemblies, oil seals, eccentric collars, and dust shields should be included in the excisable value. The Revenue argued that since the items were removed from the factory fitted with these accessories and quoted as a single item in the price list and invoices, the composite value should be the excisable value.
Findings of Court:
The court found that the Revenue admitted the accessories were not parts of the ball bearings. Since Tariff Entry No. 49 specifically covers rolling bearings (ball or roller bearings), the accessories do not fall under this entry. Regarding post-manufacturing expenses, the matter was remanded for further determination based on existing judicial precedent.
Issues: Whether the value of accessories fitted to ball bearings at the time of clearance should be included in the excisable value under Tariff Entry No. 49, and whether post-manufacturing expenses for packaging and insurance are allowable.
Ratio Decidendi: The excisable value is determined by what falls under the specific Tariff Entry. Since the accessories were admitted to be accessories and not parts of the ball bearings, they do not fall under the entry for rolling bearings, regardless of whether they were fitted at the time of removal or quoted as a composite price.
Result: Appeals are allowed.
Expenses - The court referred to this case to resolve the issue regarding post-manufacturing expenses such as wooden crates and transit insurance.
(1) TWO issues arise in these appeals by the assessee against a judgment and order of Customs, Excise and Gold (Control) Appellate Tribunal.
(2) THE first issue relates to the value for the purpose of excise duty of ball bearings manufactured by the assessee. It was the case of the assessee that the ball bearings were complete when they consisted of the inner ring, the outer ring, the ball or rollers and the cage. Snap rings, sleeve lock devices, cup assemblies, oil seals, eccentric collars, dust shields, etc., were accessories and not necessary for the manufacture of the complete ball bearings. The Revenue, however, argued that the duty liability had to be determined at the time of clearance and the ball bearings had been actually removed from the appellants factory fitted with accessories. Therefore, the composite value thereof was the excisable value of the ball bearings. The tribunal upheld the contention of the Revenue on the basis that (i) the entire article was cleared as ball bearings; (ii) in the price list, invoices and catalogue, the assessee had quoted the item as ball bearings and the price for the entire article was stated; and (iii) no separate price was quoted for accessories and the ball bearings.
(3) IT is not the case of the Revenue that the snap rings, sleeve lock devices, etc., are parts of ball bearings. It is the Revenues case that these are accessories but they were fitted to the ball bearings when the ball bearings were removed from the appellants factory. The Tariff Entry at the relevant time (No. 49 read, "Rolling bearings, that is to say, ball or roller bearings, all sorts". Clearly, what fell under this entry were the ball bearings and not what, admit- tedly, are the accessories thereof. Accordingly, the conclusion of the tribunal on this issue must be set aside.
(4) THE other issue related to post-manufacturing expenses in the form of wooden crates used for the purpose of safe transportation and transit in- surance. This issue is covered by the judgment of this court in government of India v. Madras Rubber Factory Ltd. - 1995 (77 E.L.T. 433 (SC). The issue shall have to be remanded to the Assistant Commissioner of central Excise, Ranchi, for determining what is allowable on this account, having regard to the aforesaid judgment.
(5) THE appeals are allowed. No order as to costs.