2013 (10) TMI 991 - AT - Central Excise

Valuation - Undervaluation of vehicles - Rule 8 of valuation rules - Manufacture of chassis and sale of complete motor vehicle Waiver of Pre-deposit Held that - Following - The questions framed in the order of reference are accordingly answered in favour of the Revenue and against the assessee appeal. Following Eicher Motors Vs. CCE, Indore 2008 (6) TMI 19 - CESTAT NEW DELHI - We are not able to appreciate as to how having taken credit of the duty paid on chassis on the basis of 110% of the cost of production/manufacture, would not include the additional 10% of cost in the assessable value of the vehicle, particularly when in respect of other goods procured directly by them on the account of Eicher, used as raw material, their transaction value is taken into account and credit is taken of the duty paid on those goods. The value of chassis for the purpose of arriving at the assessable value of the complete motor vehicle shall be the assessable value of the chassis worked out by Eicher under Rule 8 of the Excise Valuation Rules, and not its actual cost - the applicant has not been able to make out a case for full waiver of pre-deposit. the applicant No. (1) directed to make deposit of 25% of duty upon such submission balance dues would stand waived and its recovery stayed during the pendency of the appeal Partial stay granted.

Summary

Issues:
Waiver of pre-deposit of Central Excise duty, penalty imposed under Section 11AC of the Central Excise Act, 1944, penalty imposed under Rule 26 of the Central Excise Rules, 2002.

Analysis:
Two separate applications were filed for the waiver of pre-deposit of Central Excise duty and penalties imposed on two different entities. The first applicant manufactured goods on a job work basis, availed Cenvat credit of duty paid on chassis, and utilized it for duty payment. The contention was that the assessable value of the fully built vehicle was correctly determined based on relevant rules and judicial decisions. On the contrary, the Revenue argued that the assessable value was undervalued, leading to the demand of duty and penalties. The issue of valuation had been previously decided by the Larger Bench. The Tribunal found that the applicant did not add 10% of the cost as notional profit, resulting in under-valuation, in contrast to the decision of the Larger Bench regarding the assessable value of fully body-built vehicles.

The Tribunal noted that the applicant's case was in line with the Larger Bench's decision. Consequently, the applicant was directed to deposit 25% of the duty within a specified timeframe, with the balance dues waived upon compliance. The recovery of the remaining amount was stayed during the appeal's pendency. The decision was based on the applicant's failure to establish a case for full waiver of pre-deposit, considering the legal precedents and arguments presented during the proceedings.