2019 (7) TMI 1165 - AT - Central Excise

CENVAT Credit - Job work - duty paid chassis from various manufacturers including M/s. Tata Motors Ltd. - principal to principal basis transaction - demand alongwith penalty u/r 27 of CER - HELD THAT - This Tribunal vide its earlier order in the case of HYVA INDIA LTD, M/S. TATA MOTORS LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX- BANGALORE-I 2019 (3) TMI 548 - CESTAT BANGALORE on identical issue has allowed the appeal of the assessee by setting aside the duties and also dropped the penalties imposed on Tata Motors. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of cenvat credit to M/s. Vectra Advanced Engineering Pvt. Ltd.
- Imposition of penalty on M/s. Tata Motors Ltd. under Rule 27 of the Central Excise Rules, 2002.

Analysis:
1. Denial of Cenvat Credit:
The appellants, engaged in body building on duty paid chassis supplied by manufacturers like M/s. Tata Motors Ltd., faced denial of cenvat credit and imposition of penalties. The dispute centered around the assessable value for duty payment, with the Department alleging inclusion of ineligible discounts, freight charges, and automobile cess by M/s. Tata Motors Ltd. The appellants contended that they followed Rule 6 of Central Excise (Valuation) Rules, relying on case law and circulars. They argued that the issue was settled in favor of the assessee in a similar case involving M/s. Hyva India Ltd., where penalties on Tata Motors Ltd. were dropped by the Tribunal. The Tribunal, after considering submissions and precedent, found in favor of the appellants, citing the earlier decision in the case of M/s. Hyva India Ltd. The Tribunal emphasized the importance of determining the assessable value correctly and set aside the demand of duties and penalties, allowing the appeals of the appellants.

2. Imposition of Penalty:
The imposition of a penalty on M/s. Tata Motors Ltd. under Rule 27 of the Central Excise Rules, 2002 was a significant issue in the case. The appellants argued that the penalties were unjustified, citing the decision in the case of M/s. Hyva India Ltd. where similar penalties were dropped by the Tribunal. The Tribunal, following the precedent and considering the facts of the case, set aside the penalties imposed on Tata Motors Ltd. The Tribunal's decision was based on the correct interpretation of the rules governing the determination of assessable value and the duty liability in such transactions. By aligning with the earlier decision and emphasizing the correct application of valuation rules, the Tribunal ruled in favor of the appellants, thereby overturning the penalties imposed on Tata Motors Ltd.

This detailed analysis showcases the legal intricacies involved in the judgment, highlighting the key arguments, precedents, and the Tribunal's reasoning leading to the final decision in favor of the appellants.