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TMI Blog2023 (6) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... eived by the appellant from their customers, has not been included in the price of aluminum die-castings sold to the said customers, for the purpose of arriving at the assessable value for discharge of central excise duty as required by Rule 6 of CVR. The price of goods in the normal course includes the cum-duty value of inputs both fixed and variable among other things that goes into its manufacture. Just because these inputs i.e. dies and moulds have discharged central excise at the time of their manufacture, it will not absolve their aggregate final price, inclusive of duty s paid, from being taken into consideration for the purpose of determining the assessable value of aluminum die-castings. By applying Rule 6 of CVR to the impugned goods it is seen that the value of the aluminum die-castings shall be deemed to be the aggregate of its transaction value and the amount of money value of any additional consideration flowing directly or indirectly from the buyer to the assessee, which in this case is the free supply of dies and moulds. Considering that the duty paid on inputs cause a cascading effect on the final price of the goods, government had introduced the MODVAT scheme t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.41689 of 2013 - Final Order No. 40389/2023 - Dated:- 31-5-2023 - Ms. Sulekha Beevi C.S., Member (Judicial) and Shri M. Ajit Kumar, Member (Technical) Shri N. Viswanathan, Advocate for the Appellant Smt. Anandalakshmi Ganeshram, Superintendent (AR) for the Respondent ORDER M/s. Best Cast IT Ltd., Chennai, the appellants herein, are manufacturers of aluminium die-castings falling under Chapter sub-Heading 8708, 8714, 8538, 8409 etc. of the Central Excise Tariff Act, 1985 (CETA). 2. It was found that the appellant had been manufacturing moulds and dies and selling the same to their customers by raising central excise invoices, but the moulds and dies were received back/ retained by the appellant and used in the manufacture of aluminium die-castings for the same customers. Revenue was of the view that amortised cost of the dies/moulds supplied free of cost to the appellant by their customers should have been included in the assessable value of the aluminium die-castings. A show cause notice dated 27.07.2009 was issued for the period July 2004 to March 2009 demanding excise duty short paid. After due process of law, the adjudicating authority confirmed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayed that the impugned order may be set aside. 5. We have heard Ms Anandalakshmi Ganeshram, Superintendent (AR) on behalf of revenue. She has drawn attention to Section 6 (1) (ii) of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, (CVR) to state that the value of dies, moulds supplied free whether supplied directly or indirectly by the buyer free of charge or at reduced cost for use in connection with the production and sale of such goods, the proportionate cost of the dies/ moulds has to be included in the assessable value. She also drew our attention to Boards Circular No. 17/4196-CX (Sic), dated 23.1.1996 (Circular No. 170/4/96-CX dated 23/1/96 issued from file No. 6/14/94-CX.I) wherein the Board had clarified that the proportionate cost of pattern has to be included in the assessable value of the casting even in cases where such patterns are being supplied by the buyers of the casting or is prepared / manufactured by the job worker at the cost of the buyer. She also relied on the Larger Bench judgment passed in the case of Mutual Industries Ltd. Vs. Commissioner of Central Excise, Mumbai [2002-TIOL-543-CESTAT-DEL-LB], wherein the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctly from the buyer to the assessee in relation to sale of the goods being valued and aggregated accordingly, namely: - i. Value of materials, components, parts and similar items relatable to such goods; ii. Value of tools, dies, moulds , drawings, blue prints, technical maps and charts and similar items used in the production of such goods; iii. Value of material consumed, including packaging materials, in the production of such goods; iv. Value of engineering development, art work, design work and plans and sketches undertaken elsewhere than in the factory of production and necessary for the production of such goods Explanation 2 Where an assessee receives any advance payment from the buyer against delivery of any excisable goods, no notional interest on such advance shall be added to the value unless the Central Excise Officer has evidence to the effect that the advance received has influenced the fixation of the price of the goods by way of charging a lesser price from or by offering a special discount to the buyer who has made the advance deposit (emphasis added) Boards Circular No. 170/4/96-CX dated 23/1/96 issued from file No. 6/14/94-CX.I w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... castings sold to the said customers, for the purpose of arriving at the assessable value for discharge of central excise duty as required by Rule 6 of CVR. The price of goods in the normal course includes the cum-duty value of inputs both fixed and variable among other things that goes into its manufacture. Just because these inputs i.e. dies and moulds have discharged central excise at the time of their manufacture, it will not absolve their aggregate final price, inclusive of duty s paid, from being taken into consideration for the purpose of determining the assessable value of aluminum die-castings. By applying Rule 6 of CVR to the impugned goods it is seen that the value of the aluminum die-castings shall be deemed to be the aggregate of its transaction value and the amount of money value of any additional consideration flowing directly or indirectly from the buyer to the assessee, which in this case is the free supply of dies and moulds. Board has also made it clear vide its Circular No. 170/4/96-CX dated 23/1/96 that the proportionate cost of pattern (in this case dies and moulds) has to be included in the assessable value of the casting even in cases when such patterns (in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and dies, jigs and fixtures were eligible for the CENVAT Credit procedure and perhaps for other duty exemption notifications as well. However, exemptions are exceptions to the Rule. It is for a taxpayer to choose an eligible notification or procedure that is most convenient or beneficial. This is not the same as saying that by discharging the duty on the moulds and dies and using the same in the manufacture of aluminum die-castings they had obviated the need for taking into account the amortized cost of moulds and dies for the determination of the final products ie aluminum die-castings. Every exemption / scheme has conditions attached and has to be read strictly as held by a Constitution Bench (Bench of Five Judges) of the Hon ble Supreme Court of India in the landmark case of Commissioner of Customs (Import) Mumbai Vs. M/s Dilip Kumar and Company and Ors [Civil Appeal No. 3327 of 2007, dated 30/07/2018], and has to be tested for compliance with notification conditions. Hence a mere bald statement by the appellant that they were eligible for notification 67/1995 CE and were otherwise eligible for CENVAT credit but did not avail the same due to the difficulty of book keeping etc, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s judgment in the case of Mega Rubber Technologies (supra), where in it was held that when Central Excise duty is paid on moulds at one time or recovered by amortizing the cost of goods produces it is the same. Whereas Revenue has relied on the Larger Bench judgment passed in the case of Mutual Industries Ltd. (supra), wherein the Hon ble Tribunal held that additional value of the moulds must necessarily go in assessing the duty payable on the finished product under excise law. We find that although the larger bench decision of the Hon ble Mumbai in Mutual Industries Ltd. was brought to the notice of the Hon ble Tribunal in the case of Mega Rubbers, the same was not discussed in the order. We find that the larger Bench of the Hon ble Tribunal has addressed the issue comprehensively. The relevant portion is extracted below. 7 . Section 4 of the Central Excises and Salt Act, 1944 provides for finding out the value of excisable goods for purposes of charging of duty of excise. As per Section 4(1)(a) the value for charging of duty of excise should be the normal price, if the price is the sole consideration for the sale. Further, Rule 5 of Central Excise (Valuation) Rules, 1975 st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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