2018 (4) TMI 474 - AT - Central Excise

Valuation - whether the amortized cost of the said material was required to be added in the assessable value of their final product? - Held that - appellant has produced the Chartered Engineer s certificate to indicate that such tools and dies continued to be used by them for the subsequent period - the said certificate was not part of the proceedings before the authorities below. As the same requires examination and verification, we deem it fit to set aside the impugned order and remand the matter to the original adjudicating authority for doing the needful - appeal allowed by way of remand.

Summary

Issues involved:
1. Addition of amortized cost of tools and dies in the assessable value of final products.
2. Imposition of penalty equivalent to the duty amount.
3. Applicability of penalty in case of payment of duty before show-cause notice.

Analysis:
1. The judgment dealt with the issue of adding the amortized cost of tools and dies in the assessable value of final products. The appellant, engaged in forging manufacturing, received amounts for manufacturing tools, dies, and molds. The Revenue claimed the amortized cost of these materials should be included in the assessable value, leading to a demand of approximately ?24 lakhs for 2004-05. The original authority dropped penalty proceedings as the demand was paid before the show-cause notice, confirming the demand with interest but no penalty. The Commissioner (Appeals) later allowed the Revenue's appeal, imposing a penalty equal to the duty amount, leading to the current appeals.

2. The appellant's advocate acknowledged previous decisions against adding amortization costs to assessable values but contested the time period and necessity of interest payment. The appellant argued that tools were used even before the notice, and the deposit was made timely. The advocate presented a Chartered Engineer's certificate supporting the continued use of tools beyond the notice period. Regarding penalty, the advocate argued against its imposition due to early deposits and suggested a reduction based on the time period considered for duty liability.

3. The Revenue countered by highlighting the appellant's challenge on limitation grounds and the evolving legal stance on penalty imposition post the original adjudication. The Tribunal found that the cost of tools and dies should be added to assessable values but remanded the matter for further examination due to the absence of the engineer's certificate in previous proceedings. The appellant was granted an opportunity to contest the penalty issue before the original authority, ensuring a comprehensive review of both issues.