2017 (9) TMI 768 - AT - Central Excise

Validity of SCN - case of appellant is that the said SCN was issued with the presumption that the cost of drawing and design was @ 0.085% of the cost of goods manufactured - Held that - there is no material on record to establish that the cost of drawing was @ 0.085% of the cost of manufacture. Therefore, we hold that the demand is presumptive in nature and therefore not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Inclusion of cost of drawing and design in assessable value for Central Excise duty calculation.

Analysis:
The appeal was directed against an Order-in-Appeal passed by the Commissioner Central Excise (Appeals) Lucknow, regarding the inclusion of the cost of drawing and design in the assessable value for Central Excise duty calculation. The appellants were involved in manufacturing parts of motor vehicles supplied to M/s Tata Motors Ltd., Lucknow. The Revenue presumed the cost of drawing and design to be @ 0.085% of the cost of goods manufactured, leading to a demand for Central Excise duty. However, M/s Tata Motors Ltd. clarified through a letter that the cost of drawing was nil as they provided dimensions and specifications for the parts. The Tribunal noted the absence of evidence to support the presumption of the cost of drawing being a percentage of the cost of manufacture. Consequently, the Tribunal held the demand to be presumptive and unsustainable, setting aside the Order-in-Appeal and allowing the appeal. The appellant was granted consequential relief as per law, with appreciation expressed for the assistance provided by the amicus curiae, Mr. Kartikey Narain.

This judgment primarily revolved around the issue of whether the cost of drawing and design should be included in the assessable value for Central Excise duty calculation. The Tribunal considered the submissions made by the parties and the evidence provided, particularly the clarification from M/s Tata Motors Ltd. regarding the nil cost of drawing. The Revenue's presumption of the cost of drawing being a certain percentage of the cost of goods manufactured was found to lack substantiation. As a result, the Tribunal deemed the demand based on this presumption to be unsustainable and set it aside, allowing the appeal in favor of the appellant. The judgment highlighted the importance of concrete evidence and proper substantiation in determining the assessable value for Central Excise duty, emphasizing the need to avoid presumptive assessments without sufficient basis.

In conclusion, the Tribunal's decision in this case centered on the lack of evidence supporting the Revenue's presumption regarding the cost of drawing and design for the manufactured parts supplied to M/s Tata Motors Ltd. The Tribunal, after careful consideration of the facts and submissions, found the demand for Central Excise duty to be presumptive and not sustainable. By setting aside the Order-in-Appeal and allowing the appeal, the Tribunal underscored the necessity of concrete evidence and proper assessment methods in determining the assessable value for Central Excise duty calculations, ensuring fairness and accuracy in taxation matters.