2008 (6) TMI 510 - AT - Central Excise

Valuation - cost of transportation laying jointing testing and commissioning charges - includibility - Rule 6(3)(b) of Cenvat Credit Rules

Summary

Issues:
- Interpretation of Rule 6(3)(b) of Cenvat Credit Rules regarding payment of 8% amount on exempted final products.
- Consideration of elements like cost of transportation, laying, jointing, testing, and commissioning in determining the price of goods at the factory gate.

Interpretation of Rule 6(3)(b) of Cenvat Credit Rules:
The case involved a Revenue appeal challenging an order where the Commissioner found that elements such as cost of transportation, laying, jointing, testing, and commissioning should not be included in the price of goods at the factory gate for the purpose of paying the 8% amount on exempted final products. The Commissioner relied on a Tribunal ruling in the case of Indian Hume Pipe Co. Ltd. v. CCE - 1994 (70) E.L.T. 752 (T). The Department argued that the impugned order did not comply with Rule 6(3)(b) of the Cenvat Credit Rules, requiring the reversal of 8% of the sale price. However, the Tribunal upheld the Commissioner's decision, stating that the elements in question should not be considered part of the price at the factory gate, as per the Tribunal's previous ruling.

Consideration of Elements in Price Determination:
The Tribunal examined the appellants' case involving the manufacture and clearance of M.S. Pipes under a composite contract that included transportation, laying, jointing, testing, and commissioning. The appellants availed Cenvat credit but did not maintain separate accounts for dutiable and exempted products. They paid 8% of the total price of exempted final products, excluding certain elements, as required by Rule 6(3)(b). The Tribunal reiterated that the elements like cost of transportation, laying, jointing, testing, and commissioning should not be part of the price for calculating the 8% amount. Citing Rule 6(3)(b), the Tribunal emphasized that the price for which the 8% amount is calculated excludes these elements. As the issue had been previously decided in the assessee's favor, the Tribunal found no merit in the appeal and rejected it.

In conclusion, the Tribunal upheld the Commissioner's order, emphasizing that the elements of cost of transportation, laying, jointing, testing, and commissioning should not be included in the price of goods at the factory gate for the purpose of calculating the 8% amount on exempted final products under Rule 6(3)(b) of the Cenvat Credit Rules. The Tribunal's decision was based on the interpretation of the relevant rule and previous precedents, leading to the rejection of the Revenue's appeal.