2018 (7) TMI 1210 - AT - Central Excise

Valuation - inclusion of amortized costs in assessable value - Held that - From the invoice it is clear that on the amortized cost the respondent has already paid the duty; therefore they complied with the conditions to the Board Circular No. 170/4/96-CX dt. 23.01.1996. The Revenue has misunderstood the issue by holding that as amortization cost has not been recovered from the buyer therefore the respondent is liable to pay the duty - Admittedly as per the invoice the respondent has paid duty on amortization cost therefore no proceedings were required to be initiated against the respondent. Demand do not sustain - appeal dismissed - decided against Revenue.

Summary

Issues:
- Whether the respondent is liable to pay duty on the amortized cost of moulds and dies supplied free of cost by the principal manufacturer.
- Whether the respondent has complied with the conditions regarding the payment of duty on the assessable value.
- Whether the Revenue's misunderstanding of the concept of "assessable value" justifies the initiation of proceedings against the respondent.

Analysis:
1. Liability to pay duty on amortized cost: The case involved the respondent manufacturing LED lights on a job work basis, receiving moulds and dies free of cost from the principal manufacturer, and paying duty on the goods after adding 10% on the basis of cost + amortized cost of moulds and dies. The Revenue contended that since the respondent deducted the amortized cost from the payment received from the buyer, they should pay duty on the amortized cost. However, the Ld. Commissioner (Appeals) held that the respondent had indeed paid duty on the amortization cost, leading to the dropping of proceedings against the respondent.

2. Compliance with assessable value conditions: The tribunal examined a sample invoice provided by the respondent, showing that they had paid duty on the assessable value, including the amortized cost. The tribunal noted that the respondent had already paid duty on the amortization cost as per the invoice, complying with the conditions outlined in Board Circular No. 170/4/96-CX dt. 23.01.1996. The tribunal emphasized that duty is payable on the assessable value, and the fact that the respondent did not recover a part of the assessable value from the buyer did not mean duty was not paid on it.

3. Misunderstanding of "assessable value": The Revenue's misunderstanding of the concept of "assessable value" was highlighted, as they equated the amount recovered with the assessable value. The tribunal clarified that duty is based on the assessable value, not solely on the amount recovered from the buyer. The Ld. Commissioner (Appeals) had thoroughly examined the issue and confirmed that the respondent had indeed paid duty on the amortization cost, as evidenced by the invoice presented.

4. Final Decision: After detailed analysis, the tribunal found no infirmity with the orders of the Commissioner (Appeals) and upheld them. Consequently, the appeals filed by the Revenue were dismissed, affirming that the respondent had fulfilled their duty payment obligations, including on the amortized cost of moulds and dies received free of cost.