2017 (2) TMI 312 - AT - Central Excise

Valuation - inclusion of amortized cost of dies/tools in assessable value - appellant has relied on the decision of Hon ble Apex Court in the International Auto Ltd Vs. Commissioner of Central Excise, Bihar 2005 (3) TMI 132 - SUPREME COURT OF INDIA , to claim that the demand be set aside - Held that - It is seen from the decision of the Tribunal that the said goods were supplied free of cost under Rule 57F(2) and the said goods were components - In the instant case the goods are dies/tools and not components and same are not supplied under Rule 57F(2) but under Rule 57AC(5) (b). The provisions being different the decision of Hon ble Apex Court in case of International Auto Ltd cannot be applied to the instant case - value to be included in assessable value - appeal dismissed - decided against appellant. Clearance of defective goods as waste - valuation - Electrical insulation tapes - whether the Tribunal was justified in seeking assessment at the price which M/s. Leo Pack (to whom defective goods were cleared) sold the goods? - Held that - It is seen that on the one hand appellant have not provided any basis for arriving at assessable value at which the said defective tapes were cleared. On the other hand, the revenue has adopted the sale price of the goods after clearance from job worker as the assessable value. Neither Revenue nor appellant has cited any rule under which the said value has been adopted. In that respect order of the Original authorities are not speaking order and therefore matter has to be remanded back to the original adjudicating authority to spell out under which rules the value was enhanced - Appeal allowed by way of remand. Refund claim - adjustment of refund against pending dues - Held that - The impugned orders are set aside as one of the demand has been set aside. The matters are remanded to the original adjudicating authority for the purpose of adjustment of dues - matter on remand. Appeal disposed off.

Summary

Issues:
1. Appeal No. E/247/06: Demand of duty on amortized cost of dies/tools not included in the value of goods manufactured.
2. Appeal No. E/129/06: Assessment of damaged electrical insulation tapes cleared as waste.
3. Appeals E/2422, 2502/06: Refund adjustment against pending dues without prior notice.

Analysis:

Issue 1 - Appeal No. E/247/06:
The appellant, M/s. Bhor Industries Ltd., appealed against the demand of duty on the amortized cost of dies/tools supplied by M/s. Toyota Kirloskar Ltd. for manufacturing excisable goods. The appellant argued that the tools/dies were not their property and were to be returned to the supplier after completing the order. They contended that the price agreed upon with the customer was the sole consideration for the sale, with no additional consideration received. The appellant also challenged the extended period of limitation invoked, claiming no suppression or collection over and above the sale price. The Tribunal dismissed the appeal, distinguishing previous decisions and highlighting that the tools and dies were not components but supplied under a different rule. The Tribunal also noted that the decision in the case of Amco Batteries Ltd. did not apply in this scenario.

Issue 2 - Appeal No. E/129/06:
In this case, the appellant, a manufacturer of electrical insulation tapes, cleared damaged tapes as waste to another entity, M/s. Leo Pack, who recovered some finished tapes from the material and sold them to M/s. Bhor Industries Ltd. The revenue challenged the assessment based on an arbitrary price adopted by the appellant. The Tribunal allowed the appeal by way of remand, as the value at which the defective tapes were cleared was not adequately explained by the appellant or the revenue. The matter was remanded back to the original adjudicating authority for clarification on the rules governing the value enhancement.

Issue 3 - Appeals E/2422, 2502/06:
These appeals involved the adjustment of refunds against pending dues without prior notice. The appellants challenged the adjustment, citing lack of specific notice and referring to a previous Tribunal decision for the claim of interest. The Tribunal set aside the impugned orders due to the setting aside of one of the demands. The matters were remanded to the original adjudicating authority for proper adjustment of dues, if any, after determining in terms of the order of the Tribunal in the previous appeals.

This judgment highlights the complexities of duty demands, assessment of damaged goods, and refund adjustments in excise matters, emphasizing the need for clear justifications and adherence to legal procedures in such cases.