The assessee engaged in the manufacture and supply of sugar machinery carried out the activities at site of its customers as per the contract entered with them and for completion of the order as per the contract some of the components were manufactured by assessee itself and some were bought out.
The adjudicating authority, relying upon the contract of 80TPH Boiler entered by the assessee with customer, held that as per the scope of supply the assessee would design, procure, manufacture and supply the boiler and contract price was inclusive of cost of all other items which were necessary for completing the supply of the machinery and equipment as per scope of supply.
Show-cause notice was issued to the assessee on the ground that the value of bought out items was includible in the value of the contract price and duty was demanded on said contract/agreement value after deducting the value of the assessee’s own manufactured goods.
In another set of show-cause notices, it was alleged that the assessee had produced the excisable goods during installation of plants and the same were installed in sugar plants and, therefore, liable for duty on goods.
Whether where goods which came into existence after using bought out goods and assessee’s own manufactured goods had resulted into immovable property, i.e., whole sugar plant or its part in form of power section or other sections, there was no reason to demand duty on bought out goods – Held, yes
Whether further when bought out goods were not part of any excisable goods at time of their clearances, in that case no duty could be demanded – Held, yes
Whether capital goods manufactured within premises of Sugar Mills and used therein only shall be eligible for exemption Notification No. 67/95-CE – Held, yes
Citation: [2018] 94 taxmann.com 77 (Mumbai – CESTAT)