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CASE NO.:

Appeal (civil) 2560 of 2005

PETITIONER:

Siddartha Tubes Ltd.

RESPONDENT:

Commissioner of Central Excise, Indore (MP)

DATE OF JUDGMENT: 16/12/2005

BENCH:

Ashok Bhan & S.H. Kapadia

JUDGMENT:

JUDGMENT

KAPADIA, J.

This civil appeal under section 35-L (b) of the Central Excise Act, 1944

(hereinafter referred to as "the Act") is a sequel to civil appeal

nos.4247-4248 of 2000, hence, it is not required to restate the facts of

the case.

In this civil appeal, a short question which arises for determination is -

whether the department was right in including the cost of sockets and the

value of service charges in the assessable value of m.s./g.i. pipes.

The appellant herein had filed its price lists under rule 173-C in the form

of part-II in respect of m.s./g.i. pipes for approval with the department,

in which it claimed deduction towards service charges and cost of sockets

from the assessable value of m.s./g.i. pipes. According to the department,

the sockets fitted to the pipes were the essential parts of the pipes; they

enabled the functioning of pipes and in absence of the sockets, the said

m.s./g.i. pipes could not be said to have been completed as the sockets

were the essential parts for joining the pipes to each other. According to

the department, service charges were not deductible from the assessable

value of the pipes, as the said charges were paid by the assessee to Madhya

Pradesh Laghu Udhyog Nigam Ltd. for procuring orders/payments from various

departments of the state government and that the matter was squarely

covered by the decision of this court in the case of Coromandel Fertilisers

Ltd. v. Union of India & Ors., reported in (1984) 17 ELT 607.

According to the appellant, sockets were bought out duty paid items. They

were independent excisable goods answering different tariff classification

contained in the schedule to the Tariff Act. According to the appellant,

the sockets were not manufactured by them. According to the appellant, the

sockets were duty paid accessories. According to the appellant, the sockets

were not components of m.s./g.i. pipes. According to the appellant, the

activity of fitting a socket on one end of the pipe has not been mentioned

in the note to chapter 73. It is also not mentioned in the section note

under which chapter 73 falls and, therefore, the cost of the sockets was

not includible in the assessable value of m.s./g.i. pipes. As regards the

service charges, the appellant submitted that the said charges were not

connected to the manufacture of m.s./g.i. pipes; that, the service charges

were paid to the Madhya Pradesh Laghu Udhyog Nigam Ltd. when goods were

supplied to various departments of the state government and since the

charges were incurred by the assessee beyond the point of clearance, the

said charges were not includible in the assessable value of the pipes.

According to the appellant, these charges did not contribute to the

character of the goods in question. They were like inspection charges or

storage charges and, therefore, they were not includible in the assessable

value of the pipes.

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We do not find any merit in the above arguments advanced on behalf of the

appellant. The essential basis of valuation under section 4 of the Act is

the wholesale cash price charged by the appellant. Normal price under

section 4(1)(a) constituted a measure for levy of excise duty. In the

present case, we are concerned with assessment and not with classification.

Duty under section 4 was not leviable on the "conceptual value" but on the

normal price charged or chargeable by the assessee. [See: Union of India &

Ors v. Bombay Tyre International Ltd., reported in AIR (1984) SC 420]

On facts of this case, the adjudicating authority has found that pipes were

cleared from the place of removal (factory gate) with the sockets fitted

thereto. Further, the appellant had charged its custom