2007 (2) TMI 86 - AT - Central Excise

Cenvat/modvat Appellant contended that the cost of installation and commissioning is not includible in the price of pipes for calculation of 8% - Held that appellant contention is correct and allowed the appeal with consequential relief

Summary

Issues:
- Correct value calculation for 8% payment under Rule 6(3)(b) of Cenvat Credit Rules, 2002.
- Inclusion of costs of installation, commissioning, and transport in the price of pipes.
- Interpretation of Rule 6(3)(b) of Cenvat Credit Rules, 2002.

Analysis:
The case involves appeals against Orders-in-Appeal regarding the manufacturing of cement coated MS pipes and the calculation of 8% payment under Rule 6(3)(b) of Cenvat Credit Rules, 2002. The appellants argued that costs of installation, commissioning, and transport should not be included in the price of pipes for the 8% calculation. The lower authorities disagreed, stating that only sales tax and other taxes could be excluded from the price. The Commissioner held that Valuation Rules did not apply. The appellants challenged these findings.

Shri S.P. Mathew, representing the appellants, contended that transportation, laying, jointing, and commissioning costs should not be part of the pipe value for Rule 6(3)(b) purposes. He cited a Cost Accountant's certificate as evidence of the price bifurcation. The JDR supported the lower authorities' interpretation of the rule, emphasizing that only taxes could be excluded from the price.

The Tribunal examined the case and found that transportation, laying, and commissioning costs should not be included in the price for 8% calculation under Rule 6(3)(b) of Cenvat Credit Rules, 2002. They noted that such costs are typically not considered for Central Excise duty calculations. The Cost Accountant's certificate provided the necessary bifurcation evidence. Consequently, the demands made on the appellants were deemed unsustainable, and the appeals were allowed with any consequential relief.

In conclusion, the Tribunal's decision clarified the exclusion of certain costs from the price calculation under Rule 6(3)(b) of Cenvat Credit Rules, 2002, emphasizing consistency with Central Excise law and the importance of proper evidence such as the Cost Accountant's certificate in determining the correct value for payment calculations.