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TMI Blog2018 (11) TMI 1136X X X X Extracts X X X X X X X X Extracts X X X X ..... icles. During scrutiny of ER-I Returns, for the months of December 2008, April 2009, June 2009 and November 2009, it was noticed that the respondents had removed 16 numbers of motor vehicles (prototypes) (2200CC - 7 Seater) to their unit Nasik on returnable basis. Since there was no sale involved, the department requested the respondents to redetermine the value under Rule 11 r/w Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 and arrive at 110% of the cost of production under CAS-4. To this, the respondents vide letter dated 20.4.2009 submitted CAS -4 statement and arrived the value of one motor vehicle as Rs. 71,14,198/- for the period December 2008 and April 2009. Similarly, they had submitted C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facture and commercial marketing of similar model motor vehicles. They have adopted the value of existing similar motor vehicles sold subsequently under Rule 4 of Central Excise Valuation Rules 2000. He argued that Rule 4 uses the word "such goods" and the value of the prototypes cannot be the same as motor vehicles which are commercially marketed. As prototypes vehicles are distinct from the similar motor vehicle models sold subsequently, adoption of the value of such vehicles for valuation of prototypes cannot be in accordance with Rule 4 of Central Excise Valuation Rules 2000. The adjudicating authority has drawn support from the Order-in-Original No.18/2010 dated 28.10.2010 passed by the Commissioner, Pune. Since the order is passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 4. He therefore prayed that the demand proposed in the show cause notice may be confirmed. 4. The ld. counsel Shri Raghavan Ramabhadran appeared and argued the matter on behalf of the respondents. He submitted that the prototypes were cleared to their unit at Nasik on returnable basis for extensive testing at the testing track facility located therein so as to determine their quality and road worthiness. On successful and satisfactory testing, the respondent undertakes production of the motor vehicles in line with the prototypes. After the testing process, the prototype models are scrapped / destroyed or kept as display pieces. Thus goods were cleared by the respondent for testing on payment of excise duty. For this purpose, the price a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, the ld. counsel fairly submitted that in another proceedings, the Commissioner of Central Excise, Pune has confirmed the demand vide order dated 30.3.2012. It is submitted that the adjudicating authority has rightly dropped part of the demand and waived the penalties. 5. Heard both sides. 6. As pointed out by ld. AR, since there is no appeal filed by the respondents, the issue with regard to excisability and marketability of the prototypes does not require any further analysis. The issue that has to be looked into is only with regard to the valuation of the prototypes. The department contends that the valuation under Section 4(1)(b) r/w Rule 11 and Rule 8 should be applied. It is pertinent to note that when the respondent was asked t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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