2025 (1) TMI 669 - AT - Central Excise

Determination of assessable value for the completed vehicles under Rule 10A(iii) read with Rule 8 of the Central Excise (Determination of Price of Excisable Goods) Rules, 2000, when the vehicles are used captively by the Defense Establishment and not sold - HELD THAT - In the appellant s own case, on the identical issue, for the previous period, the Principal Bench of the Tribunal in M/S PERFECT MECHANICAL INDUSTRIES VERSUS C.C.E. DELHI IV 2015 (5) TMI 525 - CESTAT NEW DELHI , has considered the issue and has held ' The Department seeks to demand duty on 110% of the fabrication charges by invoking Rule 8 of the Central Excise Valuation Rules. Rule 8 of the Central Excise Valuation Rules is applicable only when the goods manufactured by a manufacturer are captively consumed by him or by some other manufacturer on his behalf but this is not the case here as the appellant after manufacturing the complete vehicle by constructing the body on the duty paid chassis received by them, returned the complete vehicles to M/s Ashok Leyland / vehicle factory Jabalpur, who in turn supplied those vehicles to the Armed Forces.' Conclusion - The appellant was not liable for additional duty based on inflated assessable value calculations under Rule 10A(iii) and Rule 8. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the assessable value for the completed vehicles should be determined under Rule 10A(iii) read with Rule 8 of the Central Excise (Determination of Price of Excisable Goods) Rules, 2000, when the vehicles are used captively by the Defense Establishment and not sold.
Whether the appellant is liable to pay duty on 110% of the body-building charges, as determined by the department, or if the duty should be calculated based on the actual transaction value as per the appellant's contention.
Whether the previous Tribunal decision in the appellant's own case for an earlier period is applicable and binding in the current scenario.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Determination of Assessable Value under Rule 10A(iii) and Rule 8

Relevant Legal Framework and Precedents: The legal framework involves Rule 10A(iii) and Rule 8 of the Central Excise Valuation Rules, 2000. Rule 8 applies when goods are captively consumed. The appellant argued that these rules should not apply as the vehicles were not captively consumed by them but were supplied to the Defense Establishment.
Court's Interpretation and Reasoning: The court interpreted that Rule 8 is not applicable as the completed vehicles were not captively consumed by the appellant or on their behalf. Instead, they were supplied to the Defense Establishment, thus not fitting the criteria for captive consumption.
Key Evidence and Findings: The appellant received duty-paid chassis from M/s Ashok Leyland and Vehicle Factory, Jabalpur, and returned the completed vehicles to them after body fabrication. The vehicles were then supplied to the Directorate of Ordnance Services, New Delhi.
Application of Law to Facts: The court applied the law by determining that since the vehicles were not captively consumed, Rule 8 was inapplicable. The appellant had duly paid duty on the fabrication charges, and the department's demand for additional duty based on inflated assessable value was unfounded.
Treatment of Competing Arguments: The appellant's argument that the previous Tribunal decision should apply was upheld, while the department's contention for applying Rule 8 was rejected.
Conclusions: The court concluded that the impugned order was not sustainable, and the demand for duty on 110% of the fabrication charges was incorrect.

Issue 2: Applicability of Previous Tribunal Decision

Relevant Legal Framework and Precedents: The principle of res judicata and the binding nature of previous decisions in identical circumstances were considered.
Court's Interpretation and Reasoning: The court reasoned that the previous Tribunal decision in the appellant's own case, which addressed identical issues, should be applied to the current case.
Key Evidence and Findings: The previous decision had set aside similar demands from the department, establishing that Rule 8 was inapplicable.
Application of Law to Facts: The court applied the previous decision to the current facts, finding no material difference in circumstances.
Treatment of Competing Arguments: The appellant's reliance on the previous decision was deemed valid, while the department's attempt to distinguish the cases was dismissed.
Conclusions: The court concluded that the previous decision was binding and applicable, leading to the setting aside of the impugned order.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The impugned orders, therefore, are not sustainable. The same are set aside. The appeals are allowed."
Core Principles Established: The judgment reinforced the principle that Rule 8 of the Central Excise Valuation Rules is inapplicable when goods are not captively consumed by the manufacturer or on their behalf. It also underscored the binding nature of previous Tribunal decisions in identical cases.
Final Determinations on Each Issue: The court determined that the appellant was not liable for additional duty based on inflated assessable value calculations under Rule 10A(iii) and Rule 8. The previous Tribunal decision was deemed applicable and binding, leading to the setting aside of the impugned order.

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