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2017 (3) TMI 606 - AT - Central ExciseValuation - whether in the valuation of such goods on basis of CAS-4 certificate, bonus/gratuity needs to be included while determining the value or not? - Held that: - in terms of CAS-4 royalty of the nature of the technical knowhow is includible in the assessable value, but royalty in the nature of brand or IPR value is not includible - consideration paid in the agreement though termed as royalty, is actually Technical knowhow fee. The same is charged on the sale price of the final product. It actually is consideration for technical knowhow. Thus in terms of CAS-1 as well as CAS-4 same is includible in the assessable value. There are some product which do not qualify as product in terms of the agreement, whether the addition if any of this royalty can be made in respect of product defined under agreement? - Held that: - Chips manufactured by the appellant are not covered by the definition of the product and thus royalty paid, if any, cannot be added for the purpose of arriving at assessable value of the chips in terms of CAS-4. The royalty charges paid in respect of technical knowhow would be includible in the cost, irrespective of the fact that the same are paid at the time of sale. The measure of the royalty on the basis of sale price is just a convenient mechanism to measure the royalty payable on account of transfer of technical knowhow. Penalty u/s 11 AC - Held that: - CAS 1 which was relevant for the said period clearly prescribed that royalty is paid in respect of technical know how is includible in the assessable value. I find that in the identical circumstances in case of Otis Elevator Co(I) Ltd(supra), [2012 (11) TMI 358 - CESTAT, MUMBAI], the Tribunal has upheld the penalty u/s 11AC. The appeal is partly allowed to the extent that revision of assessable value by inclusion of royalty in respect of product not covered by agreement is set aside - The matter is remitted to the Original adjudicating authority for re-quantification of the demand separately in each appeal - appeal allowed by way of remand.
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