1997 (5) TMI 271 - AT - Central Excise

Summary

Issues:
1. Waiver of duty and penalty imposed on the appellants by the Commissioner of Customs & Central Excise, Goa.
2. Addition of the value of dies and fixtures supplied by TELCO to the assessable value of the final product manufactured by the appellants.
3. Methodology for determining the proportional value addition to the assessable value of the components manufactured by the appellants.

Analysis:
1. The appellants sought a waiver of duty amounting to Rs. 32,14,859 and a penalty of Rs. 5 lakhs imposed by the Commissioner of Customs & Central Excise, Goa. The Tribunal found that the matter needed to be remanded and granted a stay while taking up the appeal for disposal.

2. The appellants, a joint venture of Goa Government and TELCO, manufactured parts of motor vehicles falling under Heading 87.08 of the Central Excise Tariff Act, 1985. The issue arose when the value of duty paid dies and fixtures supplied by TELCO for the manufacture of components was proposed to be added to the assessable value of the final product. The Commissioner's order confirmed the demand and imposed a penalty after considering the appellants' defense.

3. The Tribunal, after hearing both parties, referred to a previous decision in Flex Industries v. C.C.E., 1997 (91) E.L.T. 120, where it was noted that the Central Board of Excise & Customs had clarified the inclusion of the cost of patterns in the assessable value of castings. The Tribunal supported the principle of proportional value addition based on the expected life and capability of the materials involved. However, it raised concerns about the method used by the Commissioner to determine the proportional value addition, suggesting a reassessment based on a different approach. The matter was remanded to the Commissioner for redetermination in accordance with the Tribunal's decision in Flex Industries Ltd. supra, and the appellants were instructed to provide necessary particulars for the reassessment promptly.

4. The Tribunal highlighted the importance of a realistic estimate of the expected life and capability of materials like dies and fixtures in determining the appropriate proportion of their value to be added to the assessable value of the final product. It directed the Commissioner to reconsider the methodology for determining the proportional value addition, emphasizing the need for compliance with the Tribunal's decision and the involvement of a Cost Accountant or Chartered Engineer in the valuation exercise.

5. The Commissioner was instructed to address the appellants' contentions against the extended period for the demand under Section 11A of the Central Excises Act and the penalty imposed under Rule 173Q. The appellants were to be given an opportunity to present their case, and the Commissioner was required to handle these aspects according to the law. The case was remanded to the Commissioner for further proceedings in line with the Tribunal's directives.