2017 (5) TMI 1011 - AT - Central Excise

Valuation - royalty - includibility - case of appellant is that the order passed by the adjudicating authority relying on the earlier Tribunal order is not proper as subsequently the said order was appealed against before the Hon ble Supreme Court. The Hon ble Supreme Court judgment has set aside the order of the Tribunal order therefore now the case deserves to be decided on the basis of Hon ble Supreme Court judgment - Held that - the matter needs to be remanded to the adjudicating authority to pass a fresh order and quantify the demand in accordance with the principle laid down by the Hon ble Supreme Court - appeal allowed by way of remand.

Summary

Issues:
- Assessment of excise duty on pre-recorded audio cassettes and CDs
- Inclusion of cost of material supplied by music companies to job workers in assessable value
- Proper computation of excise duty based on legal precedents

Analysis:

1. Assessment of Excise Duty:
The case involved the appellant, engaged in the manufacture of audio cassettes and CDs, being investigated for their transactions with job workers. The Department alleged that the assessable value for excise duty calculation was incorrect as it did not include the cost of components like DAT and inlay cards supplied by a music company. This led to the seizure of audio cassettes and issuance of show cause notices for duty demand, penalty, and interest. The Order-in-Original confirmed the duty demand and other proposals, prompting the appellant to appeal to CESTAT.

2. Inclusion of Material Cost in Assessable Value:
The Tribunal, in its initial order, set aside the decision and remanded the case back to the Commissioner, citing precedents where the cost of materials supplied by music companies to job workers should be included in the assessable value. However, the method for determining this value was not accepted. The Commissioner, in a denovo adjudication, confirmed the duty demand, interest, and penalties against the appellant, leading to their appeal before CESTAT.

3. Proper Computation of Excise Duty:
The appellant argued that the Tribunal's earlier decision, which formed the basis of the Commissioner's order, was reversed by the Supreme Court in a similar case. They contended that royalty should not be added to the assessable value of CDs, as per the Supreme Court's judgment. The Revenue, on the other hand, supported the findings of the impugned order. CESTAT, after considering both sides, observed that the matter needed to be remanded to the adjudicating authority to pass a fresh order in line with the Supreme Court's decision, setting aside the impugned order.

In conclusion, the judgment highlighted the complexities of determining the assessable value for excise duty on pre-recorded audio cassettes and CDs, emphasizing the importance of following legal precedents and Supreme Court rulings in such matters. The case underscored the need for proper computation and inclusion of all relevant costs in the assessable value, ensuring compliance with the Central Excise Act, 1944.