2017 (4) TMI 640 - AT - Central Excise

Valuation - cost of design and development of art work - includibility - case of the department is that the cost of design and development of the art work, which is used on behalf of the customers should be included in the assessable value of the packing materials manufactured by the appellant - Held that - the design and development charges for art work charged by TPCIL to the customers and such art work was used by Tetra Pack India Ltd. is clearly includable in the assessable value of the appellant, as per the clear provision made in the Central Excise Valuation Rules, 2000 w.e.f 01/07/2000 - for the entire period involved in the present case, the cost of art work provided by the customers to the appellant is includable in the assessable value. As regards the use of 335 drawings out of 2200 drawings for manufacture of goods, we are of the view that if all the drawings were not used, the value of 2200 drawings cannot be included in the manufacture of goods, which were claimed to have been manufactured out of 335 drawings. As regards the limitation, both the lower authorities have not properly examined the fact whether there is a suppression of facts or otherwise. Accordingly, the issue of limitation was also not considered properly. Appeal allowed by way of remand.

Issues Involved:
1. Inclusion of design and development charges in the assessable value of packaging materials.
2. Applicability of Central Excise Valuation Rules, 2000 to charges for art work.
3. Consideration of proportionate costs of drawings used in manufacturing process.
4. Cum duty benefits to be extended to the appellants.
5. Examination of limitation period and suppression of facts.

Issue 1: Inclusion of design and development charges in the assessable value
The appellant, engaged in manufacturing packaging materials, faced a demand for including the cost of design and development of art work in the assessable value of the materials. The department argued that the cost should be included as it was used on behalf of customers. The appellant contended that the charges should only be included from 01/07/2000, citing specific provisions in the Central Excise Valuation Rules, 2000. The Tribunal noted that the cost of art work provided by customers should be included in the assessable value for the entire period involved, relying on legal precedents.

Issue 2: Applicability of Central Excise Valuation Rules, 2000 to charges for art work
The appellant argued that only the charges from 01/07/2000 should be included, based on the introduction of specific provisions in the Central Excise Valuation Rules, 2000. The Tribunal, however, held that the cost of art work provided by customers should be included for the entire period, referring to legal precedents and the provisions of the Rules.

Issue 3: Consideration of proportionate costs of drawings used in manufacturing process
The appellant highlighted discrepancies in the value of drawings and the number actually used in manufacturing. They argued that only the proportionate costs of drawings used should be considered for duty calculation. The Tribunal agreed that the proportionate cost of drawings used in manufacturing should be included in the assessable value, emphasizing the need for proper verification by the adjudicating authority.

Issue 4: Cum duty benefits to be extended to the appellants
The appellant claimed that cum duty benefits should be considered, citing legal judgments supporting this position. The Tribunal agreed that cum duty benefits should be extended to the appellants, criticizing the adjudicating authority for not granting this benefit.

Issue 5: Examination of limitation period and suppression of facts
The appellant raised concerns about the limitation period and suppression of facts. The Tribunal observed that the lower authorities had not properly examined whether there was suppression of facts, indicating a lack of proper consideration on the issue of limitation. Consequently, the Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority for a fresh decision, emphasizing the need to verify facts and follow legal precedents on all issues.

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