9911796707
TMI Blog2003 (6) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... 944 read with Section 11AC of the Act. 2.During the POD, the assessee was engaged in the manufacture of plastic moulded parts of Colour Television, Audio Systems and Washing Machines. They manufactured such goods on job work basis and cleared the same on payment of duty to the customers. Among such customers were M/s. Sony India Pvt. Limited (for short, M/s. SIL), M/s. L.G. Electronics (I) Pvt. Limited (for short, M/s. LGE) and M/s. Matsushita Televisions and Audio India Limited (for short, M/s. MTA) who supplied free of cost to the assessee the moulds and dies required for the manufacture of the goods ordered by them. When the assessee cleared the goods to these customers during the POD, they did not include the costs of the moulds and dies in the assessable value of the moulded goods for the purpose of payment of Central Excise duty thereon. The department found this out and issued the SCN to the assessee demanding the differential duty. That demand was confirmed by the Commissioner in Order-in-Original dated 24-3-2000 and the appeal preferred thereagainst resulted in the Tribunal's remand order dated 10-10-2000. In that proceedings, it was submitted by both sides before the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CN was in conformity with the principle laid down in Mutual Industries (supra). Such moulds (as mentioned in the Commissioner's order) are the following :- "Rail Guide, Front Cover G-14, Rear Cover G-14, Door Control G-14, Button Power G-14, Button Control G-14, Guide Light G-14, Holder Cassette (W/man), Cabinet Front (W/man), Cabinet Rear (W/man), Holder Cassette (A+B), Speaker Box Rear (L R), Speaker Box Front (L R), Cabinet Front, Speaker Front (L)". In respect of the moulds viz. Front Cover -2167, Rear Cover-2167, Bracket Main, Panel Control, Door Control and Button Power, for which the assessee had claimed the life span of mould to be three to five years, the Commissioner found the moulds to be old and second-hand, held their maximum life to be three years and approved the amortisation given in the SCN, after noting that the assessee had not produced any evidence to show that the moulds had actually been used in the three years' period for manufacture of more moulded products than that shown in the SCN. In respect of the remaining moulds viz. Back Cover-1487, Rear Cover-2185, Cartridge Heater, Band Heater, Thermocouple A B, Beznet G-21 T-21 and Shaft Door received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of five years' life span and 90% production efficiency would have resulted in a much lower figure than what was determined in the SCN and consequently the duty liability would have been much lower than the SCN estimate. The same argument was advanced in respect of the moulds of Rail Guide which were received from M/s. SIL under Rule 57-S(6) challan dated 12-9-97 and were still in use. In respect of the mould of Shaft Door, it was submitted that the mould had been received from M/s. SIL under Rule 57-S(6) challan dated 10-3-98 and the same was sent back to the customer on the very next day after using it for production of 2,500 pieces of Shaft Doors. There was no justification in limiting the life span of such a mould to three years and estimating a high amortised cost. Cost Accountant's certificates which were produced in respect of the moulds supplied by M/s. LGE and M/s. MTA were also not accepted. The Commissioner could have examined the Cost Accountant before rejecting his certificates. It was further submitted by the Counsel that the assessee's statements (worksheets) filed along with the Cost Accountant's certificates were also disregarded. 6.Ld. Counsel, on the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de payment of duty on any value addition. Suppression of material facts with intent to evade duty was evident. The extended period of limitation was, therefore, invocable to demand duty on the differential value of the moulded components cleared by the appellants to M/s. SIL, M/s. LGE and M/s. MTA during 1996-97 to November, 1998. 8.We have examined the records and submissions. Much of the debate was on the question whether the Commissioner had rightly amortised the costs of the moulds and dies for the purpose of value addition in respect of the moulded products. This question requires to be examined with reference to the principle laid down in the case of Mutual Industries (supra). In Mutual Industries, the Larger Bench approved the method of amortisation in Flex Industries Ltd. v. CCE, Meerut - 1997 (91) E.L.T. 120 referred to by the DR In Flex Industries, a regular Bench of the Tribunal had adopted the principle contained in Board's Circular No. 170/4/96-CX, dated 23-1-96, and worked out a method illustrated as under :- "To illustrate, we assume that a set of four cylinders of the value of Rs. X can be used in manufacture of ten lakhs printed pouches. Hence it is reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant's certificates produced by the party. He ought to have considered the certificates for the purpose of amortising the cost of moulds per unit in terms of the Board's circular which was binding on him. 9.Counsel also relied on Surveyor's reports (said to have been obtained from abroad by the customer at the time of importation of the moulds) which certified life expectancy of the moulds to be five years. At the same time, it was submitted that some of the moulds received by the appellants in June and August, 1996 were still in use when this appeal was filed, which clearly meant that such moulds could be used far beyond their certified life span. ld. Counsel also cited instances of moulds having been used and returned to the customer within one or two days of the date of receipt thereof from them, which meant that a major part of life span of such moulds was left, unutilized, to the customer after the Rule 57-S(6) transaction. However, there is no evidence as to how long the customer, on their own or through job workers, could benefit from such unutilized part of the mould life. In such circumstances, we are of the view that the life expectancy of five years reported by the ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E.L.T. 345 (T)= 2002 (53) RLT 410] — a case somewhat similar to the instant one. In any view of the matter, the extended period of limitation has been correctly invoked in this case to demand duty from the appellants. 10.For the reasons which we have stated in para (8) of this order, the amortisation, by the Commissioner, of the cost of the moulds of Rail Guide, Back Cover-1487, Rear Cover-2185, Cartridge Heater, Thermocouple (A B), Front cover-2167, Rear Cover-2167, Bracket Main, Panel Control, Door Control, Button Power, Beznet G-21 T-21 and Shaft Door is set aside as it is not in conformity with the Board's guidelines endorsed in Mutual Industries (supra). The demand of duty on the above moulds is consequently set aside. The Commissioner is directed to determine the amortised value afresh by accepting the relevant certificates of Cost Accountant to the extent admissible in terms of the Board's circular, and to requantify demand of duty accordingly. In respect of other moulds, there is no dispute raised in this appeal and therefore the amortisation as determined in the impugned order and the demand of duty on such amortised value are affirmed. 12.As the proviso to Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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