M/S THERMAX LTD. versus COLLECTOR OF CENTRAL EXCISE

Citation: [1998] 2 S.C.R. 769 · Decided: 15-04-1998 · Supreme Court of India · Bench: S.C. AGRAWAL · Disposal: Case Partly allowed

Judgment (excerpt)

MIS THERMAX LTD. 
A 
v. 
COLLECTOR OF CENTRAL EXCISE 
APRIL 15, 1998 
[S.C. AGRA WAL ANDS. SAGH!R AHMAD, JJ.] 
B 
-
-<; 
Central Excises and Salt Act, 1944: Section 4. 
Excise duty-Value of goods-Installation and Commissioning charges-
Jncludibility of-Assessee manufactured boilers and also installed and c 
commissioned the same at site-Specific amounts were charged for such post-
manufacturing steps under separate invoices-Held: In the circumstances of 
the case, the installation and commissioning charges includible in the 
assessable value of the goods. 
The appellant-assessee manufactured Boilers, Process Heat Equipment D 
~· 
~ 
etc. as per requirements of the customers. The manufacturing process 
included post-manufacturing steps like installation and commissioning of 
the Boiler at the site for which the appellant charged specific amounts from 
its customers under separate invoices. However, the appellant had not included 
the installation and commissioning charges in the assessable value of the E 
Boiler. 
The Assistant Collector, Central Excise held that the installation and 
commissioning charges would also be included in the value of the Boiler and 
hence demanded additional excise duty under S.4 of the Central Excises and 
Salt Act, 1944. The Customs, Excise and Gold (Control) Appellate Tribunal 
,..._ 
upheld the view of the Assistant Commissioner. Hence this appeal. 
F 
q 
Allowing the appeal, this Court 
HELD : 1. In the circumstances of the case, the judgment passed by 
the Assistant Collector as also by the Customs, Excise and Gold (Control) 
Appellate Tribunal that installation and commissioning charges have to be 
G 
treated as assessable value of the goods supplied by the appellant under S.4 
of the Central Excises and Salt Act, 1944 are not correct and are liable to 
--,< 
be set aside. [773-B-C) 
PSI Data Systems v. CCE, (1997) 89 ELT 3 SC; Mittal Engineering 
Works (P) Ltd v. CCE, [1997) 1 SCC 203 and Quality Steel Tubes (P.) Ltd. 
v. CCE, [1995) 2 SCC 372, relied on. 
H 
769 
770 
SUPREME COURT REPORTS 
(1998] 2 S.C.R. 
A 
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 6096 
B 
ABC of 1994. 
From the Judgment and Order dated 6.12.93 of the Customs, Excise and 
Gold (Control) Appellate Tribunal, New Delhi in A. No. 1234-36/86A with E/ 
C0/279-281/86-A. 
V. Lakshmikumaran, A.R. Madhva Rao and V. Balachandran for the 
Appellant. 
Anoop G. Chaudhary, Ms. Renu George and V.K. Verma for the 
C Respondent. 
The Judgment of the Court was delivered by 
S. SAGHIR AHMAD, .J. In this appeal in which four sets of court fees 
have been paid, the correctness of the common judgment passed by the 
D Customs Excise and Gold (Control) Appellate Tribunal (for short, 'the Tribunal') 
in the three appeals filed by the Revenue and one filed by the present 
appellants, is questioned. 
2. The appellants manufacture high pressure Boilers, Process Heat 
Equipment etc. as per requirements of the customers. The manufacturing 
E process includes pre and post manufacturing steps. Since Boiler has to be 
manufactured according to the requirements of the customers, the pre-
manufacturing process includes the inspection of site where the Boiler is to 
be installed and the making of its drawings and designs etc. for which the 
appellants charge and had all along charged separately from its customers. 
The post-manufacturing steps include the installation, erection and 
F commissioning of the Boiler at the site for which also the appellants have 
charged specific amounts from their customers under separate invoices. 
3. Three separate show cause notices dated December 26, 1983; February 
2, 1984 and July 30, 1984 were issued to the appellants in which it was pointed 
G out that during the period from 1.2.1983 to 30.6.1984, the appellants had 
supplied Boilers but had not included the designing and engineering charges 
and the erection and commissioning charges in the assessable value even 
though such charges were recovered by them from their customers on separate 
invoices. It was indicated in these notices that the designing and engineering, 
erection and commissioning charges etc. were the charges which constituted 
H the value of the "products" and were, therefore, assessab.le to excise duty. 
-
THERMAX LTD. v. C.C.E. [S. SAGHIR AHMAD, J I 
771 
Consequently. an amount of Rs. 1,14,990.71 was demanded from them. 
A 
-1. The Assistant Collector. Central Excise by his separate orders dated 
May 3, l 985; May 7, 1985 and June L

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