2023 (8) TMI 1044 - AT - Central Excise

Valuation - amount collected by the appellant from customers as mould charges (recovered separately) - additional consideration or not - should form part of the transaction value, as per Section 4 of Central Excise Act, 1944 or not - HELD THAT - From the legal provision of Section 4 of Central Excise Act, 1944 read with Rule 6 of Central Excise (Determination of Price of Excisable Goods) Rules, 2000, it can be seen that the value of tools, dies, moulds, drawings etc. used in production of excisable goods need to form the part of assessable value. In this case, there is no denying the fact that appellant has been collecting mould charges from the buyers of his product and therefore we hold that the amount of mould charges collected by the appellant forms an additional consideration flowing through the appellant and therefore the same need to be included in the assessable value of excisable goods. As per the provision of Central Excise law, the excisable goods first need to be assessed as per provisions of the Section 4 of Central Excise Act, 1944 read with Rule 6 of Central Excise (Determination of Price of Excisable Goods) Rules, 2000. It is irrelevant whether the goods have been cleared for domestic use for the export purpose. The legally provided scheme of assessment of the goods needs to be followed while clearing the goods even if they are meant for export. The mould charges recovered from the buyers need to be included in the assessable value and therefore, there are no legal lacunae in the impugned order-in-original and thus, there is no merit in the appeals - appeal dismissed.

Issues involved:
The judgment involves the determination of whether charges for moulds collected by the appellant from customers should be considered as additional consideration forming part of the transaction value for the purpose of Central Excise liability.

Comprehensive details:

1. Issue of additional consideration for mould charges:
The Revenue confirmed a demand based on the contention that the mould charges collected by the appellant from customers should be added to the transaction value of glass bottles supplied, as per Section 4 of the Central Excise Act, 1944. The appellant argued that the duty on exported goods would have been refunded and that excise duty on domestic supplies had already been paid. They claimed that the situation was revenue-neutral, citing various judgments in support.

2. Limitation of demand and penalty levy:
The appellant contended that the demand was time-barred as the first show cause notice was issued beyond the one-year period, with no allegation of malafide intention. They argued against the levy of penalty under Section 11AC of the Central Excise Act, 1944.

3. Interpretation of legal provisions:
The Tribunal analyzed Section 4 of the Central Excise Act, 1944 and Rule 6 of the Central Excise (Determination of Price of Excisable Goods) Rules, 2000. It was noted that the value of tools, dies, moulds, etc., used in production of excisable goods must form part of the assessable value. The Tribunal held that the mould charges collected by the appellant constituted additional consideration and should be included in the assessable value of excisable goods.

4. Exported goods and assessment:
The appellant's argument that they would receive a refund on additional duty paid for exported goods, even if mould charges were included in the assessable value, was rejected. The Tribunal emphasized that excisable goods must be assessed as per the legal provisions, irrespective of whether they are cleared for domestic use or export.

5. Decision and dismissal of appeals:
After considering the arguments and legal provisions, the Tribunal found no legal deficiencies in the order-in-original. Consequently, the appeals were dismissed, with the decision pronounced in open court on 23.08.2023.

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