2013 (9) TMI 136 - AT - Central Excise

Assessable value under Rule 10A of Central Excise Valuation Rules Supply to chassis - stay - whether body builders are job-workers - Interpretation of Provisions - Held that - Prima facie the present issue cannot be said to be akin to the case of clandestine removal of goods - The applicants had been paying excise duty on the basis of assessable value determined by them by taking into consideration the cost of chassis, cost of own raw material & convention charges, whereas the department proposed to determine the assessable value under Rule 10A of Central Excise Valuation Rules, 2000. While deciding the issue in AUDI AUTOMOBILES Versus COMMISSIONER OF CENTRAL EXCISE, INDORE 2009 (5) TMI 426 - CESTAT, NEW DELHI , the Tribunal has not imposed any penalty observing that it is an interpretation of law. In these circumstances, as the department could not place any contrary evidence to rebut the claim of the Applicants that the total liability in all these cases, would come down to Rupees Seven & Crores and Fifty Lakhs, if the price at which the goods sold by M/s. TML, is considered as a cum-duty price. There was no convincing reply from the department in response to the affidavit filed by the Applicant as to why the price at which the good were sold were not to be treated as cum-duty price in view of the explanation to section 4 - It was the contention of the Revenue that the short payment of duty was similar to the circumstances of clandestine removal of goods. Stay Application - 2 crores were ordered to be submitted as Pre-deposit stay granted partly.

Summary

Issues Involved:
1. Waiver of pre-deposit of duty and/or penalty.
2. Determination of assessable value of complete vehicles.
3. Applicability of cum-duty price under Section 4 of the Central Excise Act, 1944.
4. Interpretation of Rule 10A of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.

Issue-wise Detailed Analysis:

1. Waiver of Pre-deposit of Duty and/or Penalty:
The applications were filed seeking waiver of pre-deposit of duty and/or penalty for various applicants. The Tribunal considered the submissions from both sides. The Ld. Sr. Advocate for the applicants proposed a deposit of Rs. 2 Crores pending disposal of the appeal, which was accepted by the Tribunal. The Tribunal directed M/s. Tata Motors Ltd. to deposit Rs. 2 Crores within four weeks, with the balance amount of dues adjudged waived and recovery stayed during the pendency of the appeals. Failure to deposit would result in the dismissal of the appeals.

2. Determination of Assessable Value of Complete Vehicles:
The dispute involved the determination of the assessable value of complete vehicles manufactured by body builders from duty-paid chassis supplied by M/s. Tata Motors Ltd. The department assessed the vehicles under Rule 10A of the Central Excise Valuation Rules, 2000, treating the body builders as job-workers. The applicants contended that the dealings were on a principal-to-principal basis, and thus, Rule 10A should not apply. The Tribunal noted that this issue had been previously decided against the applicants in two cases: Audi Automobiles vs. CCE-Indore and Hyva (I) Pvt. Ltd. vs. CCE-Bombay.

3. Applicability of Cum-duty Price under Section 4 of the Central Excise Act, 1944:
The applicants argued that the differential excise duty should be determined by considering the price at which the vehicles were sold by M/s. Tata Motors Ltd. as the cum-duty price, as per the explanation to Section 4 of the Central Excise Act, 1944. The department opposed this, comparing the situation to clandestine removal of goods. The Tribunal found no convincing reply from the department on why the price should not be treated as cum-duty price and noted that the present issue could not be compared to clandestine removal.

4. Interpretation of Rule 10A of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000:
The Tribunal acknowledged that the issue was debatable and noted that the previous judgments in Audi Automobiles and Hyva (I) Pvt. Ltd. had not imposed any penalty, observing it as an interpretation of law. The Tribunal found that the applicants had been paying excise duty based on their determined assessable value, while the department proposed a different valuation under Rule 10A. The Tribunal directed the deposit of Rs. 2 Crores, considering the applicants' claim that the total liability would reduce significantly if the price was treated as cum-duty price.

Conclusion:
The Tribunal directed M/s. Tata Motors Ltd. to deposit Rs. 2 Crores within four weeks and scheduled the hearing of all appeals for 06.08.2013, with the balance dues waived and recovery stayed during the pendency of the appeals. The Tribunal also emphasized that the issue involved an interpretation of the applicability of relevant provisions of the Central Excise Valuation Rules, 2000, and the cum-duty price under Section 4 of the Central Excise Act, 1944.