1997 (6) TMI 77 - AT - Central Excise

Summary

Issues:
1. Appeal against Order-in-Appeal dated 31-8-1988 allowing the application filed by the Assistant Collector.
2. Allegations of non-payment of duty on tools, moulds, and dies.
3. Respondent's contention regarding the cost of tools, moulds, and dies.
4. Challenge before the Collector (Appeals) and subsequent Tribunal decision.
5. Dispute over inclusion of cost of dies and moulds in the value of component parts.
6. Department's argument for reflecting the value of dies and moulds in the assessable value of component parts.
7. Consideration of show cause notices and allegations made therein.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi was directed against the Order-in-Appeal allowing the application filed by the Assistant Collector. The case involved allegations of non-payment of duty on tools, moulds, and dies by the respondent, who was engaged in manufacturing components based on customer orders. The show cause notices claimed that the cost of tools, moulds, and dies was not accounted for properly, and duty was not paid on these items. The respondent argued that the realisation of the cost of tools was as per trade practice, and until components were manufactured, the tools were not returned to customers, thus no sale had occurred. The respondent also claimed exemption under specific notifications for tools, dies, and moulds.

The Assistant Collector initially dropped the proceedings without providing reasons, leading to a challenge by the Department before the Collector (Appeals). The Collector (Appeals) allowed the appeal without hearing the respondent, stating that the cost of dies and moulds should be included in the value of tools. However, the Tribunal set aside this decision due to a violation of natural justice principles and remanded the case for reconsideration. In the subsequent decision, the Collector (Appeals) found that the cost of dies and moulds should be included in the value of tools but not in the component parts manufactured by the respondent.

The Department contended that the value of dies and moulds should be reflected in the assessable value of component parts since they were developed in the course of manufacturing tools. However, the Tribunal held that the show cause notices did not allege such inclusion in the assessable value calculation. As the notices were specific to clearances and duty payment on tools, moulds, and dies, the Collector (Appeals) erred in including the cost of these items in the value of component parts for duty computation. Therefore, the Department's argument was deemed untenable, and the appeal was dismissed, with the cross objection also closed.