2023 (4) TMI 502 - AT - Central Excise

Valuation - inclusion of value of drawing/design provided to the appellant for fabrication of steel structure by their customers in the transaction value or not - Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules 2000 - HELD THAT - Firstly it is found that adoption of 10% towards value of design/drawing had already been rejected by the Tribunal in its earlier final order - Secondly, Revenue itself had accepted 0.025% towards value of drawings and designs, under same facts and circumstances, for the subsequent period vide the order-in-original dated 28th Feb., 2019, which has attained finality. Accordingly, this appeal is allowed and the impugned order is modified to the effect that 0.025% shall be considered on the value of the goods towards drawing and design charges for the purpose of valuation in terms of Rule 6 of the Valuation Rules. The appellant shall be liable to pay penalty under section 11 AC of the amount of additional duty calculated as per this order. The impugned order stands modified. Appeal allowed.

Summary

Issues involved:
The issue involved in this appeal is whether the value of drawing/design provided to the appellant for fabrication of steel structure by their customers is required to be included in the transaction value in terms of Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules 2000.

Comprehensive details of the judgment:

Issue 1: Value of drawing/design in transaction value
In the 1st round of litigation, the Revenue had made an addition of 10% to the transaction value, which was later set aside by the Tribunal due to lack of reasoning. The appellant provided certificates stating the rate for drawings/designs would be 0.025% to 0.075% of the actual cost. The Tribunal remanded the matter back to the Adjudicating Authority for a fresh decision.

Issue 2: Commissioner's rejection of contentions
The appellant argued that the cost of designs and drawings after amortization should be zero as they are of repeated nature and provided by buyers. The Commissioner rejected this, stating there was no evidence of amortization or repayment by buyers. The Commissioner also noted that the appellant is a manufacturer of custom-made engineering goods, so the value of drawings/designs cannot be considered zero.

Issue 3: Burden of proof on Revenue
The appellant contended that the Revenue arbitrarily computed the value of drawings at 10% without proper evidence. The burden to prove additional consideration regarding the cost of drawings was on the Revenue, and in the absence of such evidence, the correct transaction value could not be determined. The Tribunal cited previous cases where the value for drawing/design was much lower, based on Chartered Engineer's certificates.

Final Decision:
The Tribunal allowed the appeal and modified the impugned order, stating that 0.025% shall be considered on the value of goods towards drawing and design charges for valuation purposes. The appellant was directed to pay penalty under section 11 AC. The impugned order was thus modified based on the findings.

[Order pronounced on 11.04.2023]