2011 (10) TMI 531 - AT - Central Excise

Demand of Differential duty - increase in the value as per supplementary invoices - Held that - Department has made enquiries with the Railways and arrived at the freight amount and included the same to arrive at the landed cost of inserts for the purpose of determining the assessable value of sleepers. This stand of the Department is supported by the decision of the Hon ble Supreme Court in the case of Ujagar Prints & Others v. UOI 1988 (11) TMI 106 - SUPREME COURT OF INDIA , by which it has been held that the value of materials supplied in respect of goods manufactured on job work should be intrinsic value of the material so received for job work. Therefore the freight incurred for transporting the raw materials to the premises of the appellant stands correctly included for determining the duty amount - Decided against assessee.

Summary

Issues:
1. Modvat credit availed as part of the assessable value.
2. Inclusion of freight incurred for transport of inserts in the assessable value of sleepers.

Issue 1: Modvat credit availed as part of the assessable value

The appellant contested the demand of Rs. 37,721, treating the Modvat credit availed as part of the assessable value. The appellant received sleeper inserts from Railways, undertook job work, and returned the finished sleepers to Railways. The department added the Excise duty component, taken as Modvat credit, to the landed cost of the inserts received "free" by the appellant. The appellant argued, citing the decision in CCE v. Dai Ichi Karkaria Ltd., that the credit was available immediately on receipt of goods and cannot be part of the assessable value. The Tribunal agreed with this submission, setting aside the impugned order related to the demand of duty by including the Modvat credit in the assessable value, allowing the appeal with consequential relief.

Issue 2: Inclusion of freight incurred for transport of inserts in the assessable value of sleepers

In Appeal No. E/1508/04, the question was whether the freight incurred for transporting inserts supplied by Railways to the appellant for manufacturing sleepers should be included in the assessable value of the sleepers supplied back to Railways. The appellant argued that the inserts were supplied "free," and only the value of inserts along with duty amount was included in the invoices. The Department, after inquiries with Railways, included the freight amount in the landed cost of inserts to determine the assessable value of sleepers. Citing the decision in Ujagar Prints & Others v. UOI, the Tribunal held that the value of materials supplied for job work should be intrinsic, including the freight incurred for transporting raw materials. Consequently, the appeal by the appellant failed as the freight cost was correctly included in determining the duty amount.

This detailed summary of the legal judgment from the Appellate Tribunal CESTAT CHENNAI addresses the issues of Modvat credit and freight inclusion in the assessable value comprehensively, providing a thorough analysis of the Tribunal's decision on each issue.