2018 (11) TMI 740 - AT - Central Excise

Valuation - inclusion of prices obtained in respect of sale of moulds to buyers in the assessable value - the moulds were originally purchased by the appellant - Held that - The entire case of the Revenue is based on the assumption that the moulds actually belonged to the buyer and it was arrangement made between the parties to avoid payment of Excise duty. No evidence in respect of such assertion has been produced. Revenue has not been able to establish that the moulds belonged to the buyer of the material. In absence of this evidence, the value of moulds cannot be separately included in the assessable value of the goods. The appellants have been able to show that the moulds were purchased by them years ago and the same were used to manufacture and clear the goods to the buyers for a considerable period of time - the allegation made by the Revenue regarding inclusion of the price recovered in the sale of moulds in the assessable value cannot be upheld. Appeal allowed.

Summary

Issues:
Confirmation of demand of Central Excise duty, interest, and imposition of penalty based on the inclusion of the prices obtained from the sale of moulds in the assessable value of goods already cleared by the appellant.

Analysis:
The appellant, engaged in manufacturing plastic items using Blow Moulding and Injection Moulding processes, purchased moulds for manufacturing goods. After a period, they sold certain moulds to buyers from whom they were no longer receiving orders. The Revenue sought to include the prices obtained from the sale of these moulds in the assessable value of goods already cleared by the appellant to the buyers. The appellant argued that the value of the moulds was already included in the sale price of the goods cleared by them, as the moulds were purchased years ago and used in the manufacturing process. They contended that the moulds were not supplied free of cost by the buyers and that the prices obtained from the sale of moulds should not be included in the assessable value of the goods.

In the absence of evidence establishing that the moulds belonged to the buyers, the Tribunal found that the ownership of the moulds was with the appellant, as they had purchased the moulds years ago and used them to manufacture and clear goods to the buyers for a considerable period. The Tribunal noted that the Revenue's case was based on the assumption that the moulds belonged to the buyers, solely because the sale prices matched the purchase prices from years ago. The Tribunal held that this was not sufficient ground to conclude that the ownership of the moulds was with the buyers. Consequently, the Tribunal set aside the demand for inclusion of the price of moulds in the assessable value of the goods already cleared by the appellant and allowed the appeal on this ground.

Regarding the use of moulds by the appellant after selling them to one of the buyers, the appellant admitted the liability and paid the duty for that period. The Tribunal found no merit in imposing a penalty and set it aside. Therefore, the appeal was partly allowed, with the demand related to the price of moulds recovered from the buyers being set aside, and the penalty being canceled.

This judgment clarifies the ownership of moulds used in manufacturing processes, emphasizing the importance of evidence in establishing ownership for the inclusion of prices from the sale of moulds in the assessable value of goods.