2015 (9) TMI 1619 - AT - Central Excise

Valuation - autoparts - inclusion of Drawing & designs cost (D & D Cost) in the cost of parts manufactured by the appellants - Held that - This bench while passing final orders in the case of COMMISSIONER OF CENTRAL EXCISE JAMSHEDPUR VERSUS TATA MOTORS 2008 (12) TMI 129 - CESTAT KOLKATA held that 0.085% of cost of component has to be added while arriving of the assessable value of the components manufactured by appellants and matter was remanded to the Original Authority for re-determining the additional duty and interest if payable in accordance with law for the normal period of limitation. Appeal dismissed.

Summary

Issues involved:
Appeal against orders passed by Commissioner (Appeals) Central Excise & Service Tax, Ranchi regarding inclusion of Drawing & designs cost (D & D Cost) in the cost of parts manufactured by vendors of M/s. Tata Motors.

Detailed Analysis:

1. Inclusion of D & D Cost in Assessable Value:
The appellants argued that since they do not charge any amount for Drawing & designs cost (D & D Cost), it should not be included in the cost of parts manufactured. They contended that the D & D Cost element should not be added perpetually and cited relevant case laws to support their argument. However, the Revenue argued that the bench had already decided to add 0.085% of the cost of components as D & D Cost in a previous order, and the case was remanded to the Adjudicating authority for calculating duty liability within the normal period.

2. Tribunal's Observations and Decision:
The Tribunal reviewed the case records and noted that in a previous order, it was decided that 0.085% of the cost of components should be added to arrive at the assessable value. The Tribunal observed that there was no evidence that vendors were aware of the D & D Cost or that the Department had raised the issue earlier. The Tribunal held that the demand for D & D Cost could only be sustained for the normal period of limitation, as the escapement of duty was due to a mistake of law rather than suppression or misstatement. Consequently, the Tribunal set aside the impugned orders-in-Appeal and remanded the matter to the Original Authority for re-determining the additional duty and interest for the normal period. The Tribunal also ruled out imposing penalties on the Respondents due to the ignorance of law by both the assessees and the Departmental Authorities.

3. Confirmation of Demands by Lower Authorities:
The adjudicating authority confirmed demands and interest only for the normal period of limitation following the Tribunal's directions, which was upheld by the first appellate authority. As no appeal was filed against the Tribunal's previous order, the lower authorities' actions were deemed appropriate, leading to the dismissal of the appeals filed by the appellants.

In conclusion, the Tribunal dismissed the appeals filed by the appellants based on the observations and decisions made regarding the inclusion of D & D Cost in the assessable value of components manufactured by vendors of M/s. Tata Motors.