9911796707
TMI Blog2008 (6) TMI 483X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Sec. 11AB and penalty of amounts equal to duty under Sec. 11AC ibid on the manufacturer - the duty demands have been confirmed on the ground of under-valuation of automobile components manufactured by the appellants on job work basis for M/s. Mahindra Mahindra Ltd. (hereinafter referred to as M/s. M M) by non-inclusion of value of scrap not returned to raw material suppliers but sold by the appellants, in the assessable value of the goods manufactured on job work basis - according to the Revenue Rs. 7500 PMT which was the value at which the scrap was sold by the appellants formed part of the conversion cost and was, therefore liable to be included in the assessable value of the motor vehicle components manufactured for M/s. M M. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterials and conversion charges was based not only on general cost accounting, but also the Tribunal s decision in Hindustan Engineering. In Sept. 2003, the Tribunal held in the case of the same assessee [decision reported in 2003 (157) E.L.T. 435] that value of scrap was not required to be included in the value of components manufactured on job work basis. There was no contrary decision at that point of time and it was only on 10-3-05 that the Apex Court held in the case of General Engineering Works v. CCE, Jaipur [2007 (212) E.L.T. 295 (S.C.)] that the value of scrap was required to be included in the assessable value of goods manufactured and cleared on job work basis. The facts in MUSCO decision supra and those in the present case are i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Manager (Accounts) was recorded under Section 14 of Act on 27-9-99 wherein he inter alia stated that the cost of material is worked as raw material cost + Conversion charges + packing (if any) + Tool amortization cost - Value of scrap generated (i.e. scrap credit). He aiso stated that the scrap credit is deducted from assessable value of M.V. parts @ 7500/- per M.T. In his further statement dt. 12-10-99 he submitted sample copies of purchase orders and admitted that although they have done these manufacturing activities on job work basis, they have not filed recuisite price declaration. Further in his statement dt. 17-1-2000, he stated that on pointing out the said discrepancy they have revised the price of goods and filed the price decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he claim of the department to load the assessable value with this much portion is well substantiated, fully tenable and justified. Relevant portion of CESTAT s Order dated 2-9-2003 [2003 (157) E.L.T. 435] is extracted below :- 2. The major demand of Rs. 1,90,70,826/- in respect of the issue at (1) above. The appellant company manufactures motor vehicle parts on job work basis out of raw materials supplied by M/s. Mahindra Mahindra. The question that has been raised concerns as to whether the assessable value of the motor vehicle parts should include the raw material cost plus job charges and in addition, the value realized by the appellant company from sale of scrap arising out of such job work. The learned DR cites the case of Jay E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate duty is in any case being paid on the value of scrap at the rate applicable to such scrap. In view of our findings above, we are of the opinion that the impugned order confirming the duty demand including the value of scrap in the assessable value of motor vehicle parts is not sustainable nor also the penalties imposed on the appellant unit and its officials on this count. This establishes that the issues involved in the present appeals and the earlier one are identical. 5. The appellants cannot be faulted in following the practice as was upheld by the Tribunal in its order reported in 2003 (157) E.L.T. 435 and the appellants are to be held as acting under a bona fide belief on the basis of the above decision that scrap credit was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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