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2024 (6) TMI 1175 - AT - Central ExciseIssues Involved: 1. Inclusion of cost of tools supplied by the buyer in the assessable value. 2. Allegation of double taxation. 3. Eligibility for exemption under Notification No. 67/95-CE. 4. Inclusion of development charges in the cost of production. 5. Invocation of the extended time limit for demand. Issue-wise Detailed Analysis: 1. Inclusion of Cost of Tools: The appellant manufactured gaskets using tools supplied free of charge by their customers. The cost of these tools was not included in the cost of production nor amortized for payment of duty on the final products. The Tribunal examined whether the cost of tools supplied by the buyer should be included as an amortized cost under Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (CVR 2000). It was determined that the cost of tools, whether manufactured in-house or outsourced, must be included in the cost of production and amortized for payment of duty on the final products. 2. Allegation of Double Taxation: The appellant argued that demanding excise duty on the tools and again on the final products amounted to double taxation. The Tribunal clarified that double taxation refers to levying central excise taxes twice on the same excisable product, which was not the case here. The tools and the final products are separate excisable goods, and the duty paid on tools does not constitute double taxation. 3. Eligibility for Exemption under Notification No. 67/95-CE: The appellant claimed eligibility for exemption under Notification No. 67/95-CE for tools manufactured and used within their factory. The Tribunal concurred with the Co-ordinate Bench's decision in Ashok Iron Works, which held that the benefit of Notification No. 67/95-CE was available to jigs, fixtures, patterns, and tooling irrespective of ownership. The excise duty element does not form part of the amortized value of the tools and needs to be reworked accordingly. 4. Inclusion of Development Charges: The appellant collected payments towards 'development NVH project charges' which were not included in the cost of production nor amortized for duty payment. The Tribunal found that the value of services paid for by the buyer and used for the development of tools must be amortized. The cost incurred by the buyer should form part of the amortized cost of the final product, excluding the duty-exempted tools. 5. Invocation of Extended Time Limit: The Tribunal examined whether the extended time limit for demand could be invoked. It was concluded that mere failure or negligence in adopting the correct value and making the correct payment of duty does not constitute suppression of facts with the intention to evade duty. There was no evidence of a positive intention to evade duty, and thus, the extended period could not be invoked. The demand for the larger period was invalid. Conclusion: The matter was remanded back to the Original Authority for re-quantification of the duty demand for the normal period. The lower authority was directed to follow the principles of natural justice and provide the appellant with an opportunity to present their case. The impugned order was modified, and the appeal was disposed of with the appellant eligible for consequential relief as per law.
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