2017 (12) TMI 1087 - AT - Central Excise

Valuation - inclusion of cost of motor vehicles chassis - appellants paid sales tax / VAT on the body building charges only and not on the motor vehicles manufactured and cleared by them - Department is of the that the valuation should be taken under Rule 10A of the Valuation Rules 2000 - Held that - issue decided in the appellant own case Kamal Coach Works Pvt. Ltd. Versus C.C.E. Jaipur 2017 (1) TMI 533 - CESTAT NEW DELHI where it was held that similar issue has come up before the Tribunal in the case of Audi Automobiles vs. C.C.E. Indore 2009 (5) TMI 426 - CESTAT NEW DELHI where the condition of interest and demand of duty was sustained and penalty was set aside and was held that the said firms had cleared the goods in relation to the body fabricating and mounting on the chassis which were supplied to the said firms free of cost by the manufacturer of chassis. Being so the activity for the purpose of valuation would squarely fall under Rule 10A and not under Rule 6. Penalty - Held that - it appears on higher side - keeping in mind the doctrine of equity and justice we modify the impugned order and reduce the penalty to 50%. Appeal allowed in part.

Summary

Issues:
- Appeal against order-in-appeal passed by the Commissioner, Central Excise, Delhi-II regarding excise duty on motor vehicles.
- Valuation of motor vehicles under Rule 10A of the Central Excise Valuation Rules, 2000.
- Applicability of penalty on the appellant.

Analysis:

1. Appeal against Order-in-Appeal:
The appeals were filed against the order-in-appeal passed by the Commissioner, Central Excise, Delhi-II, confirming excise duty on motor vehicles cleared by the appellant. The duty was imposed due to contravention of Central Excise Rules and Section 4(1)(b) of the Central Excise Act, 1944. The appellant, a manufacturer of bus bodies, received motor vehicle chassis from Tata Motors Ltd., availed cenvat credit on duty paid by Tata Motors Ltd., and undertook body fabrication activities on the chassis. The department contended that valuation should be done under Rule 10A of the Valuation Rules, 2000, and imposed a penalty. The Tribunal reviewed the case and found no merit in demanding duty and interest thereon.

2. Valuation under Rule 10A:
The Tribunal referred to a previous order in a similar case where it was observed that the activity of body fabricating and mounting on chassis, with chassis supplied free of cost by the manufacturer, falls under Rule 10A for valuation purposes. The Tribunal upheld the demand of duty and interest but set aside the penalty. In the present case, the Tribunal followed the earlier order and concluded that there was no justification for demanding duty and interest. Therefore, the appeals were partly allowed, and the demand for duty and interest was dismissed.

3. Applicability of Penalty:
Regarding the penalty imposed on the appellant, the Tribunal considered the peculiar facts and circumstances of the case. While acknowledging that the penalty seemed on the higher side, the Tribunal invoked the doctrine of equity and justice to modify the impugned order. The penalty was reduced to 50% (half) in light of the specific circumstances. Ultimately, the appeals were partly allowed, with the penalty being reduced.

In conclusion, the Tribunal's judgment addressed the issues raised in the appeals, focusing on the valuation of motor vehicles under Rule 10A, the demand for duty and interest, and the applicability of the penalty. The decision provided detailed reasoning based on legal interpretations and precedents, resulting in the partial allowance of the appeals and the modification of the penalty imposed on the appellant.