2005 (7) TMI 648 - AT - Central Excise

Summary

Issues Involved: The issues involved in the judgment are the addition of costs of 'Assistance Material' not added to determine the value on which duty was paid by the appellant on assembly manufactured for BEML, and the settlement of the same based on the decision in the case of International Auto Products (P) Ltd.

Issue 1: Addition of 'Assistance Material' Costs

The appellants were engaged in manufacturing various goods for BEML and were supplied certain parts free of cost by BEML for use in the assembly manufactured and supplied to them. These materials, known as 'Assistance Material,' were sent under the provision of Rule 57F of Modvat Rules. The issue revolved around the costs of this 'Assistance Material' not being added to determine the value on which duty was paid by the appellant. The Supreme Court's decision in the case of International Auto Products (P) Ltd. settled this issue in favor of the assessee, leading to the duty demands for the period 1-10-1992 to 30-9-1995 being deemed unsustainable. Consequently, the penalty under Section 11AC was also set aside.

Issue 2: Demands for the Period 11/97 to 3/98

For the demands raised for the period 11/97 to 3/98 amounting to &8377; 94,071, it was noted that the demands were invoked without relying on the proviso clause of Section 11A(l). While this demand was confirmed, the Section 11AC penalty on this specific demand was deemed unsustainable as the necessary ingredients of Section 11AC were not invoked. Since the duty confirmed was only &8377; 94,071, which did not breach the base limit of &8377; 1 lakh duty prescribed under Rule 173Q(2), no confiscation under Rule 173Q(2) could be upheld.

Conclusion:

The appeal was consequently disposed of by partly allowing the appeal in the above terms, as pronounced in court.