2018 (4) TMI 52 - AT - Central Excise

Valuation - inclusion of excise duty in the price of raw material when cenvat credit for the same has been availed - fabrication of the body on Chassis - Held that - M/s. Bhalotia Auto has availed the cenvat credit of this amount of additional basic excise duty paid by the supplier - it is already already settled that there is no need to include the excise duty in the price of raw material when cenvat credit for the same has been availed - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
- Determination of excise duty value on body built vehicles
- Applicability of Section 4 of Central Excise Act, 1944
- Cenvat credit availed by the manufacturer
- Inclusion of excise duty in the valuation of raw materials

Analysis:

The judgment by the Appellate Tribunal CESTAT KOLKATA pertains to appeals filed against an Order-in-Appeal regarding the determination of excise duty value on body built vehicles supplied by manufacturers to another entity for further fabrication. The case involved M/s. Tata Motors Ltd. and M/s. VE Commercial Vehicles supplying chassis to M/s. Bhalotia Auto for body fabrication. The issue arose when the Department questioned the valuation method used by M/s. Bhalotia Auto for excise duty payment, leading to a demand for differential duty and penalties imposed on all parties involved.

Upon hearing both sides and examining the facts, the Tribunal noted that the excise duty was paid by the manufacturers, and cenvat credit was availed by M/s. Bhalotia Auto. The valuation method used by M/s. Bhalotia Auto was based on Section 4(1)(a) of the Central Excise Act read with Rule 11 of Central Excise Valuation Rules. The Tribunal referred to the principles laid down by the Apex Court in previous cases to determine the correct valuation method.

The Tribunal emphasized the importance of considering the real cost of raw materials and excluding the excise duty paid on raw materials covered by the Cenvat Credit scheme. Citing the decision of the Apex Court in the case of Collector of Central Excise vs. Dai Ichi Karkaria Ltd., the Tribunal clarified that excise duty paid on raw materials covered by the Cenvat scheme should not be included in the valuation.

Ultimately, the Tribunal found no merit in the impugned order and set it aside, allowing the appeals in favor of the appellants. The judgment highlighted the necessity of adhering to legal principles and previous court decisions in determining excise duty values, especially concerning the inclusion of excise duty in the valuation of raw materials when cenvat credit has been availed.

This detailed analysis of the judgment showcases the Tribunal's thorough consideration of legal provisions and precedents to arrive at a just decision regarding the determination of excise duty value on body built vehicles.