2018 (3) TMI 925 - AT - Central Excise

Penalty u/r 26 of CER, 2002 - Valuation - pattern/dies used captively - N/N. 67/1995 - Held that - in the case of M/s DCM Engineering Pvt. Ltd. 2017 (11) TMI 1165 - CESTAT CHANDIGARH , this Tribunal held that in this case on the co-noticee/buyers, penalty u/r 26 of the CER 2002 is not imposable - the penalty imposed on the appellant is set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Imposition of penalty under Rule 26 of the Central Excise Rules, 2002.

Analysis:
The appellant appealed against an order imposing a penalty under Rule 26 of the Central Excise Rules, 2002. The case involved M/s DCM Engineering Ltd., a manufacturer of castings for automobiles, who required pattern/dies for manufacturing these castings. The appellant received one-time payments from buyers for the pattern/dies and included amortized costs in their assessable value. Allegations arose that the appellant recovered the cost of pattern/dies twice from buyers, both as a one-time payment and through invoices with added amortization costs. A show cause notice was issued demanding duty on the one-time payments for pattern/dies and proposing confiscation of goods, leading to a penalty on the appellant. After adjudication, it was held that while the appellant was entitled to benefit under Notification No. 67/1995 for the one-time payments, duty was payable on the amortized costs in the assessable value. Consequently, a demand for duty was confirmed against M/s DCM Engineering Pvt. Ltd., with interest and an equivalent penalty imposed on the appellant. However, upon review, it was determined that penalty under Rule 26 was not imposable on the appellant, as evidenced by a previous Final Order related to the co-noticee/buyers. Consequently, the penalty imposed on the appellant was set aside, and the appeal was allowed.

This judgment highlights the importance of distinguishing between one-time payments for goods and amortized costs included in assessable values. It clarifies the entitlement to benefits under specific notifications and the imposition of penalties under Rule 26 of the Central Excise Rules, 2002. The decision showcases the significance of prior tribunal rulings in determining the applicability of penalties and upholding principles of fairness and consistency in legal proceedings related to excise duties and manufacturing practices.