I.J. Rao, Member (T)

1. The appellants manufacture Walkie Talkie sets and spare parts thereof. Sometime in 1985, Central Excise department noticed that the appellants were paying central excise duty on the value of co-axial feeder cables which they were supplying to their customers and were billing them in the invoices issued by them during the period 1-5-1985 to 30-6-1985. The appellants pleaded that the co-axial feeder cable was not manufactured by them but was purchased from outside sources and sold to their customers according to the specifications of the customers. They also stated that base station manufactured by them is marketable by itself and can be sold without co-axial feeder cable.

2. The Assistant Collector after considering the appellants' representations held that as the appellants opted for the procedure under Notification No. 120-CE/75 and as the base stations and their co-axial feeder cables were invoiced in a common invoice, there was no question of separation of prices for the purchased items and the manufactured items. He demanded duty.

3. In appeal the Collector (Appeals) observed that according to the invoices furnished alongwith the appeal and later, co-axial feeder cables in desired lengths were supplied with the Base Station/Walkie Talkie sets. He recorded that co-axial feeder cables so supplied were required to connect the antenna to the transreceiver and, therefore, held that co-axial feeder cables are essential to such sets. He, therefore, stated that these cables made to specifications were essential parts of the other equipment. He rejected the appeal.

4. We heard Shri O.K. Roy, the learned advocate for the appellants. Shri Roy submitted that the cables are bought-out items and are supplied to the customers as part of their trading activity. He asserted that the base stations and Walkie-Talkies are capable of being sold without the cable and that indeed they are so sold. He submitted that the cables are not inputs for final product and were not essential parts of the same.

5. Shri Roy also drew out attention to order-in-appeal No. 248, dated 6-11-1986 wherein in respect of the same appellants the Collector held that co-axial feeder cable was not an essential accessory of the product manufactured and cleared by the appellants.

6. Shri Krishnamurthy, the learned S.D.R. opposing the arguments submitted that according to the earlier judgment of the Tribunal water tanks were considered as parts of water coolers for; the purpose of valuation. On the same analogy the cable should be considered as part of the equipment manufactured by the appellants. The learned S.D.R. further submitted that the invoices show that the co-axial cable is used to connect the antenna to the walkie talkie set and the cable is made to specifications so that it exactly suits the equipment. Therefore, its value should be included in arriving at the assessable value of the base station/walkie talkie.

7. We have considered the arguments of both sides. We have perused the invoices. The appellants have, before us, asserted that their equipment can be sold without the cable and did mention some institutions who purchase the goods without the cables. There is nothing in the impugned order to show that the base stations and walkie talkie do not function without the cable. The unchallenged statement that the appellants sell the units without the cable shows that the cable could not be considered as an essential part of the equipment. It is also beyond dispute that these cables are bought-out items and are dealt with by the appellants only as part of their trading operations and not as part of their manufacturing activities. We have also perused a copy of the Appellate order passed by the Collector on 6-11-1986 in respect of the same appellants.

8. Taking into consideration all these facts and circumstances, we hold that for the purpose of assessment of the base stations and walkie talkies manufactured by the appellants, the value of cable