1997 (9) TMI 272 - AT - Central Excise

Summary

Issues:
1. Demand of duty on consideration attributable to moulds and dies supplied free of cost.
2. Application of the decision in C.C.E., Madras v. M/s. Shardlow India Ltd. for duty calculation.
3. Amortization of cost of moulds and dies over their lifespan.
4. Determination of loading factor for cost allocation.
5. Remand for re-determination of loading factor and consideration of time bar and penalty levy.

Detailed Analysis:
1. The judgment concerns the demand of duty on the consideration related to moulds and dies provided by the customer at no charge. The lower authority imposed duty based on the value of the moulds and dies, depreciation, and accrued interest. The appellant argued that a previous decision directed amortization of the cost over the lifespan of the moulds and dies. The Departmental Representative contended that the lower authority's method was reasonable. The Tribunal found the issue covered by the previous decision and allowed waiver of pre-deposit, proceeding with the appeal.

2. The appellant relied on the decision in C.C.E., Madras v. M/s. Shardlow India Ltd., where it was held that the cost of moulds and dies should be spread over the life of the equipment used for production. The Tribunal noted that the free supply of moulds and dies by customers was an additional consideration affecting pricing. It emphasized the need to quantify this consideration and amortize the cost over the lifespan of the equipment. The Tribunal directed the authorities to determine the cost on a pro-rata basis, considering the normal life span of the equipment and the quantity of goods to be manufactured.

3. The Tribunal emphasized the importance of following the principles laid down in previous decisions regarding the amortization of the cost of moulds and dies. It instructed that the cost should be spread over the lifespan of the equipment, which could be determined through technical assessments or best judgment methods. If the customer's order specified the quantity of goods to be produced using the equipment, the cost could be amortized accordingly.

4. The Tribunal directed a remand for the re-determination of the loading factor after providing the appellants with a hearing opportunity. The issue of time bar was left open for further consideration, and the imposition of penalties would be contingent on the findings regarding the limitation period. The judgment highlighted the need for a thorough assessment of the cost allocation and loading factor concerning the moulds and dies provided by customers.