2015 (5) TMI 373 - AT - Central Excise

Determination of assessable value - Inclusion of Amortized cost of mould - Demand of differential duty - Held that - Levy of duty on the difference between the charge of moulds and dies paid to maker thereof and recovery of such charge from Tata Motors is inconceivable when no such moulds and dies were removed by appellant. Such goods were never cleared by the appellant on the facts and circumstances brought out in the adjudication order. Appellant was mere user thereof. Such use of mould in the manufacture does not bring out the case of deemed removal thereof. Law is well settled that there is no one to one relation of the inputs to the outputs in Dai Ichi Karkaria Ltd. - 1999 (8) TMI 920 - SUPREME COURT OF INDIA . The finished goods cleared are only liable to duty. But, mere use of moulds and dies to manufacture of such finished goods are not exigible to levy in the hands of the appellant. Record does not reveal allegation of undervaluation of the goods cleared to Tata Motors. - In absence of any depression to the assessable value, the cost of moulds in the present case cannot be held to be liable to duty without that being cleared by the appellant nor the difference realized by appellant from Tata Motors exigible to duty in absence of removal of that goods. - Decided in favour of assessee.

Summary

Issues:
1. Whether the difference between the cost of moulds and dies paid by the appellant and the amount recovered from Tata Motors is subject to levy of excise duty.

Analysis:
The appellant argued that as they did not physically remove the moulds and dies but only used them to manufacture goods for Tata Motors, there should be no levy of excise duty on the difference between the cost paid and the amount recovered. They relied on a previous tribunal decision to support their stance. The Revenue contended that the use of the moulds and dies in manufacturing the final products for Tata Motors constituted a deemed removal subject to duty. The Tribunal found that there was no removal of the moulds and dies by the appellant, as they were merely used in the manufacturing process and not physically cleared. The law established that duty is only applicable to the finished goods cleared, not to the inputs used in production. The absence of undervaluation allegations further supported the appellant's position. The Supreme Court precedent emphasized that profit charges without affecting the assessable value are not liable for excise duty. Therefore, in this case, the cost of moulds was not subject to duty as they were not physically cleared by the appellant, and the difference realized from Tata Motors was also not exigible to duty in the absence of removal of the goods.

Final Decision:
The appeal was allowed, and it was concluded that the difference between the cost of moulds and dies paid by the appellant and the amount recovered from Tata Motors was not liable for excise duty due to the absence of physical removal of the goods by the appellant.