M. Santhanam, Member (J)

1. Review notice issued by the Government of India to review the order passed by the Appellate Collector, Central Excise, Bombay, has been transferred to the Tribunal and is being treated as an appeal.

2. A show cause notice was issued to the respondents on 5-2-1978 alleging that the respondents had cleared sets of stator and rotor affixed with the Thermal Overloading Protectors (hereinafter mentioned as TOPs) to M/s. Voltas Ltd., Thane, the cost of which was not included in the price list before the clearances. It was urged that the respondents had suppressed the cost of TOP in the price list. The respondents were asked to pay the duty of Rs. 1,93,107.60 for the period 1-7-1976 to 31-7-1978. The respondents in the reply urged that they were following the procedure prescribed by the Assistant Collector, Bombay for the movement of TOP imported by M/s. Voltas Ltd. There was no objection to such a procedure since "1968. They have been submitting' the price list for the hermetic Stator/Rotor sets manufactured by them for supply to M/s. Voltas Ltd. exclusive of the value of TOP since this was an optional accessory and the price lists have been passed by the Excise authorities without objections.

3. The Assistant Collector in the Order-in-Original dated 13-3-1979 held that the cost of the TOP was not included in the Contract Price though they were normal prices under Section 4 of the Central Excises and Salt Act, 1944. The Adjudicating' authority held that the TOPs were cleared duly fitted to the Hermetic Electric Motor and as such the assessable value of the Electric Motor would go up to the extent of the cost of the TOP. He confirmed the demand of differential duty. The respondents preferred an appeal and the Appellate Collector vide his order dated 10-11-1981 held that the TOP was an additional device to cut off the current when it exceeded particular voltage. It was used for safety and protection of the electric motors. It was an integral and essential part of the electric motor/stator/rotor. As such he was of the view that the value of the TOP need not be added to the value of the electric motor/stator/rotor sets. He also found that the demand prior to the period 5-6-1978 was time barred.

4. In the Review Show Cause Notice, the Government have pointed out that the imported TOP worked as a fuse and that the assessee cleared the set of stator and rotor affixed with the TOP to Voltas Ltd. Who intern utilised the same in the manufacture of Hermetically Sealed Compressors falling under Tariff Item 29A of the Central Excise Tariff. The Government was of the view that the goods were cleared in an improved form with the TOP and the value should have been added. For the purpose of assessment, the Proper Officer prima-facie has to go into the condition in which the goods were cleared. The respondents in their reply to the show cause notice have stated that the TOP was not an integral part of the hermetic motor but was an accessory which had been specifically desired by M/s. Voltas Ltd. Such TOPs have not been specified by the other manufacturers as Godrej Boyce Manufacturing Co. and M/s. Kirloskar Brothers. It is not a trade practice to supply TOP alongwith stator/rotor sets. It is not an essential part of the stator/rotor set because the stator/rotor set can work without this part.

5. Shri H.L. Verma, SDR argued that the TOP was fixed in the coil windings and became an integral part of the stator/rotor. It is not an accessory and it protected the motor. It was fixed even while the stator was under the process of manufacture and before it was fully finished. The value of the goods should be determined at the time of the clearances and hence the value of the TOP should also be taken into consideration. The SDR referred to the Ruling of the Hon'ble Supreme Court reported in MANU/SC/0186/1985 : 1985 (20) E.L.T. 179 (S.C.) (Empire Industries Ltd. and Ors. v. Union of India and Ors.). In paragraph 47, the Hon'ble