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2024 (4) TMI 324 - AT - Central ExciseDenial of CENVAT Credit - recovery of the differential central excise duty - appellant has discharged appropriate duty on the body building activity on the duty paid chassis supplied free of cost by M/s ALL during the period 2006-07 2007-08 or not - entitlement to avail cenvat credit of the duty paid on the chassis supplied free by M/s ALL - Sl.No.41(1)(ii) of N/N. 6/2006-CE - Extended period of Limitation - HELD THAT - It is found that from the very beginning of the proceeding, in their reply to the internal audit, the appellants have categorically submitted that they have not opted for the exemption under Notification No.6/2006-CE dated 01.3.2006, hence, not required to comply with the conditions prescribed under the said notification. They have informed that by availing cenvat credit on the duty paid chassis and after undertaking the activity of body building on the Chassis, which amounts to manufacture, they had cleared the Vehicle applying the normal tariff rate as applicable from time to time. The approach of the Department is fallacious from the very beginning. Assuming that the conditions of the notification 06/2006-CE have not been complied with, by availing CENVAT credit on the duty paid chassis, the appellant would not have been eligible to the benefit of the notification and the manufactured goods would be assessed in accordance with the normal provisions. Secondly, Explanation appended Sl.No.41(1)(ii) provides that the value of the manufactured vehicle shall be the value of the vehicle excluding the value of the chassis used in such vehicle, whereas, in the present case, the appellant has added the body building charges and the value of the chassis supplied free of cost in computing the assessable value for the purpose of payment of duty for the year 2006-07 and 2007-08; hence it is incorrect to allege that the appellant had availed the benefit of the said Notification - the appellants are entitled to avail cenvat credit on the duty paid chassis supplied free of cost by M/s. ALL to the appellant. Valuation and differential duty - HELD THAT - The period involved in the present demand notice involves 2006-07 to 2007-08. Rule 10A has been inserted to the Central Excise Valuation Rules, 2000 w.e.f. 01/04/2007. Consequently, the valuation of the body built vehicles has to be arrived at following Rule 10A from 01/04/2007 by adopting the price at which the body built vehicles are sold by the supplier M/s. ALL. For the period prior to that, the valuation has to be carried out by adopting the formula laid down by the Hon ble Supreme Court in UJAGAR PRINTS, ETC. ETC. VERSUS UNION OF INDIA AND OTHERS 1988 (11) TMI 106 - SUPREME COURT . Time Limitation - HELD THAT - The present demand is relating to differential duty on the recalculated assessable value as alleged by the Revenue. There are force in the contention of the learned advocate for the appellant as the appellant was following the method of computation of assessable value adopting the principle in Ujagar Print s case and discharging duty by disclosing all the facts; hence invocation of extended period demanding differential duty on the redetermined value by the Revenue, in absence of suppression of facts or mis-declaration, cannot be sustained. Accordingly, the differential duty of Rs.9,51,837/- demanded for the period 2006-07 and 2007-08 is barred by limitation. The impugned order is set aside - Appeal allowed.
Issues involved:
1. Whether the appellant discharged appropriate duty on the body building activity on duty paid chassis supplied free of cost by M/s ALL during 2006-07 & 2007-08. 2. Whether the appellants are entitled to avail cenvat credit of the duty paid on the chassis supplied free by M/s ALL. 3. Whether the demand is barred by limitation. Summary: The appeal is filed against the Order-in-Original No.26/2010 dated 11/11/2010 by the Commissioner of Central Excise, Bangalore. The appellants engaged in body building on duty paid chassis supplied by M/s Ashok Leyland Ltd. (M/s. ALL) were alleged to have availed cenvat credit on the chassis and cleared the vehicle on payment of duty, violating condition 10 of Notification No.6/2006-CE. A show-cause notice was issued proposing denial of cenvat credit and recovery of differential central excise duty along with interest and penalty. Issue 1: Discharge of Duty The Revenue alleged that the appellant discharged duty as per Sl.No.41(1)(ii) of Notification No.6/2006-CE but violated condition 10 by availing cenvat credit on the chassis. The appellant contended that they did not opt for the exemption under the said notification but paid duty as per normal provisions, including the value of the chassis in the assessable value. The Tribunal found that the appellant had not availed the benefit of the notification and had correctly included the chassis value in the assessable value, thus discharging appropriate duty. Issue 2: Entitlement to Cenvat Credit The Department's approach was deemed fallacious. The Tribunal held that the appellant was entitled to avail cenvat credit on the duty paid chassis supplied free of cost by M/s ALL since they did not opt for the exemption under Notification No.6/2006-CE. Issue 3: Limitation The demand for differential duty of Rs.9,51,837/- was found to be barred by limitation. The Tribunal noted that the appellant followed the method of computation of assessable value as per Ujagar Prints case and disclosed all facts. Hence, the invocation of the extended period was unsustainable. Conclusion The impugned order was set aside, and the appeal was allowed with consequential relief as per law.
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