The main legal point established in the judgment is the authority of the Tribunal to examine the dutiability of bought-out items, independent of the finality of the Commissioner (A)'s order, and the application of the concept of excisability and assessment under the taxing law.

Headnote:
Customs, Excise and Service Tax Appellate Tribunal - Dutiability of bought-out items - Central Excise Act, 1944, Section 35-G - The court discussed the dutiability of bought-out items and the authority of the Tribunal to entertain the appeal against the order of the Commissioner (A) dated 9 - 4 - 2003. Key legal provisions include Section 35-G of the Central Excise Act, 1944 and the concept of excisability and assessment under the taxing law.
Fact of the Case:

The dispute involved the dutiability of bought-out items supplied directly to a site for the manufacture of plant and equipment. The Commissioner (A) had concluded that the bought-out items were dutiable, and the duty demand was confirmed in the quantum dispute. The Tribunal, however, held that no duty was payable on the bought-out items.
Finding of the Court:

The High Court set aside the Tribunal's decision, stating that the order of the Commissioner (A) dated 22 - 3 - 2000 had become final on merits and the Tribunal was not competent to entertain the appeal against the later order of the Commissioner (A) dated 9 - 4 - 2003.
Issues: The main issue was whether the Tribunal had the authority to examine the dutiability of bought-out items after the order of the Commissioner (A) had become final on merits.
Ratio Decidendi: The court held that excisability is a matter of principle and the Tribunal was not bound by the decision of the Commissioner (A) on the question of dutiability. It emphasized the concept of assessment under the taxing law and the authority of the Tribunal to decide on facts whether the bought-out items were dutiable or not.
Final Decision: The court partly allowed the appeal, set aside the High Court's judgment, and reduced the duty demand from Rs 94,03,500 to Rs 23,56,000, with the assessee being entitled to the benefit of MODVAT credit.

Judgment

S.H. KAPADIA, J. - The short question which arises for determination in this civil appeal is whether the Customs, Excise and Service Tax Appellate Tribunal (for short "CESTAT") was right in entertaining the assessees appeal on dutiability against the order passed by Commissioner (A) dated 9 - 4 - 2003 in the quantum dispute, particularly when in the earlier round of litigation the Commissioner (A) had concluded vide order dated 22 - 3 - 2000 that the bought - out items were dutiable and which order had become final.

2. The appellants are engaged in the manufacture of plant and equipments for soaps, detergents and allied industries falling under Chapter Sub - Heading 8479.90 of the Central Excise Tariff Act, 1985. The manufactured equipments were cleared by the appellants on payment of duty. The dispute relates to dutiability of certain bought - out items like motor pumps, heat exchangers, etc. The appellants had entered into a composite contract with M/s Godrej Soaps Ltd. and M/s Galaxy Surfactants Ltd. for the supply of various items which formed part of the fatty acid plant. Under the contract, in addition to the supply of the equipments manufactured by the appellants, various duty - paid bought - out items were directly supplied by the appellants to the site of M/s Godrej Soaps Ltd. and M/s Galaxy Surfactants Ltd. These items were never received in the factory premises of the appellants. The fatty acids plant and the film sulphonation plant were to be erected and commissioned not by the appellant but by M/s K.S. Krishnan Associates Pvt. Ltd. On 23 - 5 - 1997 a show - cause notice was issued by the Department to the appellants demanding duty on the various bought - out items supplied directly to the site of M/s Godrej Soaps Ltd. and M/s Galaxy Surfactants Ltd. The demand was for the period April 1996 to March 1997. By a corrigendum dated 6 - 6 - 1997 the period was reduced to November 1996 to March 1997 (6 months). However, the duty amount was not correspondingly reduced. In reply, the appellants contended that no duty was payable on various bought - out items which were directly sent to the site. In the alternative they submitted that maximum duty payable, if any, would be Rs 23,21,500 since the period was restricted to six months. By order dated 1 - 5 - 1999 the adjudicating authority confirmed the demand on the bought - out items on the ground that the same was necessary for the manufacture of the a fatty acids plant at the site of M/s Godrej Soaps Ltd. and M/s Galaxy Surfactants Ltd. Aggrieved by the order dated 1 - 5 - 1999 the matter was carried in appeal to the Commissioner (A). By order dated 22 - 3 - 2000 the Commissioner (A) held that the value of the bought - out items was includible in the assessable value of the equipments manufactured. However, the Commissioner (A) remanded the matter for quantification of the duty liability on the ground that the demand stood restricted for 6 months. In the quantum dispute the adjudicating authority confirmed once again the duty demand amounting to Rs 94,03,500 although the period stood reduced to 6 months. Aggrieved by the said order of the adjudicating authority the appellants once again moved the Commissioner (A). Vide order dated 9 - 4 - 2003 the Commissioner (A) confirmed the duty demanded on the ground that the appellant had failed to produce evidence to disprove the quantification made by the Department. The Commissioner (A) did not consider the claim of MODVAT credit made by the appellants on the ground that the appellants had not followed the prescribed procedure for claiming MODVAT credit. Accordingly, he dismissed the appeal and also the contention of the appellants that the net duty liability would be only for Rs 20,42,993. Aggrieved, by the order passed by the Commissioner (A) dated 9 - 4 - 2003 the matter was carried in appeal by the appellants to the Tribunal. By judgment and order dated 3 - 10 - 2003 the Tribunal held that no duty was payable on the bo

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