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2021 (11) TMI 297 - AT - Central ExciseMethod of Valuation - prototype vehicles - goods cleared from the factory on payment of duty under self invoice on the comparable value of the similar vehicle applying Section 4(1)(b) of Central Excise Act, 1944 and Rule 4 of Central Excise Valuation Rules, 2000 - case of the department is that in the transaction of prototype since it is not sale value should be determined in terms of Rule 8 of the Central Excise Valuation Rules, 2000 - HELD THAT - The fact which is not under dispute is that the appellant have manufactured prototype vehicle and cleared for various testing on self consumption basis, the said motor vehicle was not used for consumption by the appellant or on his behalf for manufacture of any other article which is prime condition to invoke Rule 8. Therefore Rule 8 clearly not applicable to the facts of the present case. This Tribunal considering the same issue in the case of COMMISSIONER OF GST CENTRAL EXCISE CHENNAI VERSUS M/S. MAHINDRA MAHINDRA LTD. 2018 (11) TMI 1136 - CESTAT CHENNAI held that the value of comparable vehicle shall apply in terms of Rule 4 of Central Excise Valuation Rules, 2000 - the facts are identical accordingly, the value determined under Rule 4 of the Central Excise Valuation Rules, i.e. price of comparable goods shall apply, accordingly, the valuation arrived by the appellant in the facts of the present case is correct and legal. Appeal allowed - decided in favor of appellant.
Issues:
Valuation of prototype vehicles under Central Excise Valuation Rules, 2000. Analysis: The case involved the appellant manufacturing prototype vehicles and clearing them from the factory under self-invoice on a comparable value basis, invoking Section 4(1)(b) of the Central Excise Act, 1944 and Rule 4 of the Central Excise Valuation Rules, 2000. The department contended that the value should be determined under Rule 8 of the Valuation Rules, i.e., cost of manufacture plus 10% notional profit. The dispute centered on whether Rule 8 applied to prototypes not consumed in the manufacture of other articles. The appellant argued that Rule 8 was inapplicable as the prototypes were final products, not intermediate ones. They cited precedents where similar issues were resolved in their favor, emphasizing the application of Rule 4 for valuation. The Revenue, represented by the Superintendent AR, maintained that Rule 8 should apply as per Rule 11 and referred to the judgment in Eicher Motors Ltd. v. Commissioner of C. Ex. 2008 (228) ELT 43 (Tri. LB). However, the Tribunal examined the facts and found that the prototypes were not consumed in the manufacture of other articles, a key condition for invoking Rule 8. Citing a previous judgment involving Mahindra & Mahindra Ltd., the Tribunal held that the value of comparable vehicles should be adopted under Rule 4, not Rule 8. The Tribunal highlighted that the prototypes were subject to testing and certification before commercial manufacturing, distinguishing them from articles consumed in further production. The Tribunal emphasized that the valuation under Rule 4, based on the price of comparable goods, was appropriate in this case. It noted that the appellant's valuation method aligned with legal requirements, rendering the impugned order unsustainable. Therefore, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant. The judgment underscored the importance of correctly applying valuation rules based on the nature of the goods involved, ultimately leading to a favorable outcome for the appellant.
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