2015 (1) TMI 1082 - AT - Central Excise

Enhancement in valuation of goods - Bar of limitation - Imposition of penalties - Held that - Appellant has written to the department on 23-4-2007 that they are paying duty as per Rule 6 of the Valuation Rules not as per Rule 10A of the Valuation Rules, 2000 and they are also filing regular returns with the department and it was not objected. Moreover, the appellants have challenged the constitutional validity of Rule 10A of the Central Excise Valuation Rules before the Hon ble High Court of Bombay. In these circumstances, we hold that the extended period of limitation is not invokable and extended period is not invokable. Therefore, the demand of duty beyond the period of limitation is set aside and penalties on both the appellants before us are not imposable - demand of duty within the normal period of limitation is upheld. Cess may continue to be levied and collected on the vehicles on the condition they are cleared from the premises of the manufacturers and no cess should be levied again in case the body on the chassis is built by an independent body builder on the cess paid chassis. In the case of S.M. Kannappa Automobiles P. Ltd. v. Commr. of C. Ex., Bangalore reported in 2007 (11) TMI 207 - CESTAT, BANGALORE , the issue came up before this Tribunal and this Tribunal held that as the body builder are not required to pay cess. Cess paid on chassis in this case also on chassis M/s. Tata Motors have paid the cess. Therefore, we hold that the appellants are not required to pay cess as the body on cess paid chassis is built by the appellants. Therefore, demand of cess on automobile is set aside. - Decided partly in favour of assessee.

Summary

Issues:
1. Valuation of motor vehicle fitted with bodies
2. Applicability of Rule 10A of the Valuation Rules
3. Extended period of limitation for demand of duty
4. Imposition of penalties on appellants
5. Requirement to pay cess on automobile

Issue 1: Valuation of motor vehicle fitted with bodies
The case involved M/s. Kailash Vahan Udyog Ltd., engaged in manufacturing motor vehicles for M/s. Tata Motors, with a dispute over the valuation of vehicles fitted with bodies. The Revenue contended duty payment as per Rule 10A of the Valuation Rules, while the appellants paid duty under Rule 6. Penalties were imposed, leading to the appeals.

Issue 2: Applicability of Rule 10A of the Valuation Rules
The Tribunal referred to a previous case, M/s. Hyva (India) Pvt. Ltd. v. Commissioner of Central Excise, where it was held that duty is payable based on the valuation under Rule 10A. The Tribunal found the issue to be settled law and decided against the appellant on merits.

Issue 3: Extended period of limitation for demand of duty
The appellant argued that the demand for duty beyond a certain period was time-barred, citing a letter to the department and regular filings under Rule 6. The Tribunal noted the appellant's actions, including challenging the constitutional validity of Rule 10A, and held the extended period of limitation as not invokable, setting aside the demand and penalties.

Issue 4: Imposition of penalties on appellants
The Tribunal found in favor of the appellants regarding the imposition of penalties due to the non-invitability of the extended period of limitation. Penalties were deemed not imposable in this case.

Issue 5: Requirement to pay cess on automobile
The Tribunal examined the requirement to pay cess on automobiles, referencing a CBEC Circular and a previous case. It was held that as the body on the cess-paid chassis was built by the appellants, they were not required to pay cess. The demand for cess on the automobile was set aside.

In conclusion, the Tribunal disposed of the appeals, upholding the demand of duty within the normal period of limitation, setting aside the demand beyond the limitation period, and ruling that the appellants were not required to pay cess on the automobile due to the body being built on the cess-paid chassis.