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TMI Blog2013 (12) TMI 1453X X X X Extracts X X X X X X X X Extracts X X X X ..... Decided in the case of M/s. Lear Automotive India Pvt. Ltd. v. CCE, Nashik [2012 (11) TMI 294 - CESTAT, MUMBAI] followed. - Decided against assessee. - E/48/2007-DB - Final Order No. A/11625/2013-WZB/AHD - Dated:- 3-12-2013 - Shri H.K. Thakur, Member (T) and M.V. Ravindran, Member (J) Shri Anand Nainavati, Advocate, for the Appellant. Shri S.K. Mall, AR, for the Respondent. ORDER This appeal has been filed by the appellant against OIO No. 06/Commr/VDR II/MP/06-07, dated 28-9-2006 under which duty demand of ₹ 15,06,559/- has been confirmed against the appellant and also appropriated against the payments already made by the appellant. Interest under Sec. 11AB and penalty under Sec. 11AC has also been confirmed/imposed upon the appellant with respect to the confirmed demands. 2. Brief facts of the case are that appellant in their factory at Halol manufacture the Seats and Interiors of automobiles for M/s. General Motors India Pvt. Ltd. (GMI), Halol. For the manufacture of the above products appellant is required to get several components purchased/manufactured from other vendors. The manufacturers of such components/parts had to develop certain tools an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 of the Valuation Rules. It was his case that show cause notice has not been issued invoking the provision of Rule 11 of the Valuation Rules and Sec. 4(3)(b) of the Central Excise Act. 4. Shri S.K. Mall (AR) appearing on behalf of the Revenue on the other hand also relied upon the judgment of M/s. Lear Automotive India Pvt. Ltd. v. CCE, Nashik (supra) in support of the fact that this judgment on majority order has decided the issue against the appellant. He also relied upon the following judgments of Apex Court and jurisdictional High Court of Gujarat to the effect that a wrong rule quoted in the show cause notice will not invalidate the notice :- (i) N.B. Sanjana, AC, Central Excise, Bombay and Others v. The Elphinstone Spinning Weaving Mills Co. Ltd. [1978 (2) E.L.T. (J399) (S.C.)]. (ii) Petlad Bulkhidas Mills Co. Ltd. v. UOI [2000 (126) E.L.T. 269 (Guj.)]. 5. Heard both sides and perused the case records. The issue involved in the present appeal is whether the element of cost incurred for developing tools and moulds for manufacturing components and further used in the manufacture of seats manufactured by the appellant, is required to be added to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration and the same would be part of the Assessable Value of the goods sold by the Assessee company to M/s. GMI and therefore the Assessee company would be liable to pay Central Excise duty on this amount. In fact, this point has been conceded by the Assessee themselves in their written reply to the show cause notice as well as at the time of personal hearing and they have already paid the duty amounting to ₹ 5,32,645/- chargeable on this amount even prior to the issue of the show cause notice. However, it is pleaded that there was no intention on the part of the Assessee to evade this payment of duty as the Cenvat credit or duty paid by them would be available to M/s. GMI and as such the valuation matter is revenue neutral and hence longer limitation period under proviso to Section 11A(1) is not applicable to this case and since the Assessee have voluntarily paid the amount even prior to the issue of the show cause notice, the Assessee should not be asked to pay any interest on this duty as per the provisions of Section 11AB of the Central Excise Act, 1944 and are also not liable for any penalty under Section 11AC of Central Excise Act, 1944 or under Rule 25(1) of Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 1,85,65,000/- received from M/s. GMI as tooling advance, had been transferred by them to their vendors for development of tools/moulds for M/s. GMI, this amount is to be treated as additional consideration in the hand of their vendors and not in their hands and therefore, the amortized value of tools/moulds must be included in the Assessable value of the components cleared by their vendors to them and as such the demand of differential duty on this account must be directed against their vendors and not against them. The contention of the Assessee is totally wrong and unacceptable as it is they who had entered into a contract with M/s. GMI for manufacture and supply of automobile seats/other interiors as per the specifications of M/s. GMI and it is they (the Assessee Company) who had received the tooling advance of ₹ 1,85,65,000/- from M/s. GMI for development of tools/moulds for manufacture of various components for use in the manufacture of automobile seats/other interiors. From the point of view of M/s. GMI, it is immaterial whether the Assessee company developed the tools/moulds and manufacture all the components and thereafter assembled the automobile seats/other inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 11AB of the Central Excise Act, 1944. 6. In view of the exhaustive reasoning given by the adjudicating authority, it is evident that M/s. GMI has given a contract to the appellant to supply him a manufactured product and for that purpose an amount is given for developing the tools/moulds required for parts/components which are used in the manufacture of seats supplied to M/s. GMI. It is irrelevant as to how appellant gets the parts/components developed and manufactured but what is appropriately relevant is that such amount received is a consideration with respect to the finished manufactured seats required by M/s. GMI. Accordingly, it is required to be held that appropriate element of cost, enhancing the value of the component/parts, will also required to be added to the assessable value of the seats. Our views are also fortified by the observations made by the dissenting Member (T) in Para 16.6 and observations made by Third Member (T) made in Para 29.2 and 29.3 of judgment in the case of M/s. Lear Automotive India Pvt. Ltd. v. CCE, Nashik [2012 (286) E.L.T. 558 (Tri.-Mumbai)]. These Paras are reproduced below : 16.6 From the Explanation to Rule 6, it is seen that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no suppression. 29.3 Rule 6 of the Central Excise Valuation Rules deals with a situation where the price is not the sole consideration for sale and there is additional consideration flowing directly or indirectly from the buyer to the assessee. The Explanation to the rule clarifies and enumerates 4 situations where the additional consideration flows directly and indirectly. A reading of the rule read with the explanation thereto clearly indicates that the additional consideration is received either by way of supply of goods or by way of supply of services. In such a situation, the money value of additional consideration has to be quantified and added to the price to arrive at the transaction value. When the consideration itself is received in money as advance, the question of quantification of money value does not arise. The definition of transaction value under Section 4(3)(d) includes all amounts charged by reason of or in connection with the sale, whether payable at the time of sale or at any other point of time. In the instant case, there is no doubt that the tool advance was received in money for the supply and sale of goods by the appellant to the buyer. Therefore, s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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