2015 (5) TMI 525 - AT - Central Excise

CENVAT Credit - Valuation - body builder who build body on the chassis received from the chassis manufacturers - Job work - Department's view is that the case is covered by Rule 10A(ii) of the Central Excise Valuation Rules, 2000 and accordingly, the duty should be paid on 110% of the fabrication charges under Rule 8 of the valuation Rules - Held that - Ashok Leyland and vehicle factory, Jabalpur have cleared the duty paid chassis to the appellant and the appellant have not taken the cenvat credit of that duty and after constructing the body on the chassis, the complete vehicles were returned by them to the depot of M/s Ashok Leyland and vehicle factory, Jabalpur from where the vehicles were supplied to the Directorate of Ordnance Services, New Delhi. The appellant undisputedly have paid duty on the fabrication charges in terms of notification no. 6/06-E (Serial No. 41) whose applicability is not disputed by the Department. The fabrication charges have been determined by subtracting the value of the chassis from the price at which the vehicles were supplied to Armed Forces by M/s Ashok Leyland and vehicle factory, Jabalpur. - Rule 8 of the Central Excise Valuation Rules is applicable only when the goods manufactured by a manufacturer are captively consumed by him or by some other manufacturer on his behalf, but this is not the case here, as the appellant after manufacturing the complete vehicle by constructing the body on the duty paid chassis received by them, returned the complete vehicles to M/s Ashok Leyland/ vehicle factory Jabalpur who in turn supplied those vehicles to the Armed Forces. - Decision in the case Rolastar (P) Ltd. 2011 (9) TMI 776 - CESTAT, AHMEDABAD followed - Decided in favour of assessee.

Summary

Issues:
Interpretation of Rule 10A(ii) of Central Excise Valuation Rules and Rule 8 application for duty calculation on fabrication charges.

Analysis:
The case involved a body builder who constructed bodies on chassis received from manufacturers. The dispute was regarding the duty payment on the fabrication charges of the bodies. The appellant had not availed cenvat credit on the duty paid chassis. The Department contended that duty should be paid on 110% of the fabrication charges under Rule 8 for bodies constructed on chassis from different manufacturers. The appellant argued eligibility for exemption notification no. 6/06-CE and that Rule 8 did not apply as the vehicles were not consumed by them but supplied to the Armed Forces. The Tribunal noted that the appellant paid duty on fabrication charges as per the exemption notification, and Rule 8 did not apply as the vehicles were returned to the manufacturers for supply to the Armed Forces. The Tribunal cited precedents where Rule 8 was held inapplicable in similar situations. Consequently, the impugned orders demanding differential duty were set aside, and the appeals were allowed.