2023 (3) TMI 633 - AT - Central Excise

Valuation - free materials used in connection with the manufacture of the final product ‘Tiltable Tile Cab Assembly’ which was cleared back to ALL on payment of duty without following the procedure laid down in notification no 214/86 CE dated 23/05/86 as amended - deviation from the provisions of Rule 4 (5) (a) of Cenvat Credit Rules, 2004 (CCR) or not - HELD THAT:- Tribunal had occasions to go through a similar issue in its judgment in the case of SRF LTD. VERSUS COMMISSIONER OF C. EX., CHENNAI-I [2007 (3) TMI 613 - CESTAT, CHENNAI] wherein it had set aside the order of the lower authority wherein the issue regarding the manufacture of goods involving free receipt of inputs by the appellant at the intermediate stage of manufacture was involved.

The Hon’ble Tribunal relied upon the Hon’ble Apex Court’s judgment in INTERNATIONAL AUTO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BIHAR [2005 (3) TMI 132 - SUPREME COURT], where in it was held that in a case where a manufacturer supplied inputs free of cost to the manufacturer of intermediate products, it was not necessary to include the cost of such material in the assessable value of the intermediary products as the manufacturer of the final product was eligible for the credit of duty paid on all inputs and the intermediary product for clearance of the final product. Operation of the MODVAT scheme on the manufacturer of final product has rendered the valuation dispute of the intermediary product in question of no consequence.

Appeal allowed.