Harish Chander, Member (J)

1. M/s. Spundish Engineers Ltd. Thane, has filed an appeal being aggrieved from the order passed by the Collector of Central Excise (Appeals). Vide Miscellaneous order No. 53/90-B1 dated 24th April, 1990, the Bench had ordered the changing of the cause title. Shri J. S. Arora, Advocate with Shri G. K. Arora, Advocate has appeared on behalf of the applicant and pleaded that the doubt to be decided in the appeal is whether the charges in respect of designing and fabrication drawing raised by separate bills are to be included in the assessable value. Shri Arora, Ld. Advocate argued that this cannot form part of the product, and as such, it cannot be included in the assessable value. Shri Arora argued on the limitation point that the demand is hit by limitation. He pleaded for the acceptance of the appeal.

2. Shri M. S. Arora, learned JDR, who has appeared on behalf of the respondent, has stated that design and fabrication charges are includible in the assessable value as these are for the fabrication of the goods manufactured by the appellants. In support of his argument, he has referred to the judgment of this Tribunal in the case of Collector of Central Excise, Bangalore v. Intercon Engineers (P) Ltd., Bangalore reported in MANU/CE/0063/1987 : 1987 (28) ELT 458 (Tribunal), where it was held that it was not possible to manufacture a machine without doing drawing, designing and technical specification work for it in advance. Drawing and designing was actually the first stage of manufacture itself. It is at this stage that the manufacturer plans as to what exactly was going to be manufactured. If the respondents choose to link drawing, designing and technical specification costs under the service heading "Consultancy Charges" recovered from the customers separately but did not disclose them to the Department, it was a case of suppression of facts on their part. Therefore, the invoice value of the machines which they did not disclose to the Department was not the true and full value of these machines and the extended period of limitation was applicable. Shri Arora, learned JDR also argued that the appellant has not complied with the terms of the Notification No. 120/75-CE dated 30th April, 1975. No intimation as to the charging of designing and consultancy charges was intimated to the Department. He pleaded that in the show cause notice with the annexure the factum of charging of these charges by separate invoice was duly mentioned and, as such, extended period of limitation has to be invoked.

3. In reply, Shri J.S. Arora, learned Advocate, has clearly pleaded for the allowing of the appeal.

4. We have heard both the sides and have gone through the facts and circumstances of the case. It is not disputed that the appellants are also doing drawing, designing and technical specification work for the manufacture of the goods. The matter is fully covered by the judgment of the Tribunal in the case of Collector of Central Excise, Bangalore v. Intercon Engineers (P) Ltd. Bangalore, reported in MANU/CE/0063/1987 : 1987 (28) ELT 458 (Tribunal). Para No. 3 from the said judgment is reproduced below:

Para No. 3:

"We have carefully considered the matter. The Central Excise duty is a tax on goods and not on services. However, we find that the consultancy contracts entered into by the respondents were in part a service contract and in part they included elements of cost of manufacture of their machinery. Costs towards . drawing, designing and technical specifications of machinery were clearly elements of machinery costs. The respondents also accepted this position during the hearing before us but again pleaded that the demand was hit by time bar. We do not agree with them so far as the time bar plea is concerned. It is not possible to manufacture a machinery without doing drawing, designing and technical specification work for it in advance. Drawing and designing is actually the first stage of manufacture itself. It is