2019 (4) TMI 720 - AT - Central Excise

Valuation - inclusion of cost of drawings and designs provided by the customer in assessable value - Held that - It appears from the said statement that the cost of drawing and design was formed the part of the final product, which suffered payment of appropriate central excise duty at the time of clearance of finished product from the factory. Further, it is not the case of the department that the appellant had recovered the charges towards drawing and design from its customer. The demand confirmed on the appellant on the cost of drawing and design was not sustainable under the law - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Duty demand on the cost of drawings and designs provided by the customer.
- Allegation of not including the cost in the transaction value of goods.
- Upholding of duty demand, interest, and penalty by the adjudicating authority.
- Appeal before the Tribunal challenging the impugned order.

Analysis:
The case involved the appellant, engaged in manufacturing Spring Assembly for motor vehicles, facing a duty demand due to the alleged non-inclusion of the cost of drawings and designs provided by the customer in the transaction value of goods. The department issued a show cause notice proposing duty demand, which was confirmed by the adjudicating authority, along with interest and penalty. The Commissioner (Appeals) upheld this decision, leading to the appellant filing an appeal before the Tribunal.

During the proceedings, the appellant's advocate highlighted a crucial statement by the Dy. General Manager of the customer company, indicating that the cost of drawing and design was part of the final product, subject to central excise duty at the time of clearance. It was emphasized that the appellant did not recover these charges from the customer, and there was no evidence to suggest that the product's price was influenced by factors other than the normal commercial price. Based on these facts, the Tribunal concluded that the duty demand on the cost of drawing and design was not legally sustainable.

In the judgment, the Tribunal found no merits in the impugned order and proceeded to set it aside. Consequently, the appeal was allowed in favor of the appellant, indicating a successful outcome for the appellant in challenging the duty demand based on the cost of drawings and designs provided by the customer.

Overall, the judgment highlights the importance of considering all relevant factors in determining the transaction value of goods for excise duty purposes and emphasizes the need for clear evidence to support duty demands, especially when disputing the inclusion of specific costs in the transaction value.