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2013 (12) TMI 1453 - AT - Central ExciseValuation of goods - Interest under Sec. 11AB and penalty under Sec. 11AC - whether the element of cost incurred for developing tools and moulds for manufacturing components and further used in the manufacture of seats manufactured by the appellant, is required to be added to the assessable value of seats and cleared by the appellant to M/s. GMI - Held that - M/s. GMI has given a contract to the appellant to supply him a manufactured product and for that purpose an amount is given for developing the tools/moulds required for parts/components which are used in the manufacture of seats supplied to M/s. GMI. It is irrelevant as to how appellant gets the parts/components developed and manufactured but what is appropriately relevant is that such amount received is a consideration with respect to the finished manufactured seats required by M/s. GMI. Accordingly, it is required to be held that appropriate element of cost, enhancing the value of the component/parts, will also required to be added to the assessable value of the seats. - Decided in the case of M/s. Lear Automotive India Pvt. Ltd. v. CCE, Nashik 2012 (11) TMI 294 - CESTAT, MUMBAI followed. - Decided against assessee.
Issues Involved:
1. Whether the tooling advance received by the appellant is required to be added to the assessable value of the seats manufactured. 2. Applicability of Rule 6 of the Central Excise Valuation (Determination of Excisable Goods) Rules, 2000. 3. Whether the show cause notice is invalid due to quoting the wrong provision of law. Detailed Analysis: 1. Tooling Advance and Assessable Value: The core issue is whether the entire tooling advance of Rs. 1,85,65,000/- received by the appellant from M/s. GMI should be added to the assessable value of the seats manufactured by the appellant. The appellant argued that the tooling advance was for developing tools/moulds for parts manufactured by vendors. They contended that any amortized cost should be added by the vendors, not by them. However, the Revenue insisted that the tooling advance influenced the price of the seats and should be included in the assessable value. The adjudicating authority confirmed that the tooling advance influenced the price and should be included in the assessable value of the seats, leading to a duty demand of Rs. 15,06,559/-. 2. Applicability of Rule 6: The appellant argued that Rule 6 of the Valuation Rules, 2000, and Explanation-1(ii) to this Rule, should apply, meaning the amortized cost should be added only to the parts/components manufactured by the vendors. The Revenue, however, cited the case of M/s. Lear Automotive India Pvt. Ltd. v. CCE, Nashik, asserting that the tooling advance should be included in the assessable value of the seats. The Tribunal upheld the adjudicating authority's view that the tooling advance, used for developing tools/moulds, influenced the price of the seats and should be included in the assessable value under Rule 6. 3. Validity of Show Cause Notice: The appellant contended that the show cause notice was invalid as it did not invoke Rule 11 of the Valuation Rules and Sec. 4(3)(b) of the Central Excise Act. However, the Tribunal referred to the Supreme Court's judgment in M/s. N.B. Sanjana & Others v. The Elphinstone Spinning and Weaving Mills Co. Ltd., which stated that quoting a wrong provision does not invalidate the notice if the exercise of power can be traced to a legitimate source. The Tribunal concluded that the notice was valid despite the incorrect citation of legal provisions. Conclusion: The Tribunal upheld the adjudicating authority's order, confirming the duty demand of Rs. 15,06,559/- along with interest and penalties under Sec. 11AB and Sec. 11AC of the Central Excise Act. The appeal filed by the appellant was rejected, affirming that the tooling advance received influenced the price of the seats and should be included in the assessable value. The Tribunal also held that quoting a wrong provision in the show cause notice did not invalidate the proceedings. Pronouncement: The judgment was pronounced in the court on 3-12-2013.
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