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2021 (10) TMI 381 - AT - Central ExciseValuation - inclusion of amortised cost of patterns in respect of clearances to M/s.BEML - contravention of Rules 4, 6 and 8 of Central Excise (No.2) Rules, 2001 - whether the cost of patterns supplied by M/s.BEML are required to be amortised on all the castings cleared by the appellant even though the cost was amortised on the number of castings initially ordered by the customer? HELD THAT:- The appellants manufacture 10 castings. They clear these 10 castings by amortising the value of the pattern of ₹ 100 equally on these 10 castings say ₹ 10 rupees on each casting. The value of the pattern i.e. ₹ 100 stands covered by 10 castings. However, because of the subsequent orders of the customer, the appellant manufactures 5 more castings. As the value of the pattern has already been amortised on 10 castings, nothing remains to be amortised while clearing the additional 5 castings which were manufactured using the same pattern. Therefore, the 5 castings were cleared without amortization. It would not make any material difference if the said hundred rupees was amortised for 10 pieces or 15 pieces. What is important is to see whether or not the cost of the pattern has been amortised and has suffered Central Excise duty or otherwise. It is not the case of the department that the cost of the pattern was not amortised in the initial number of castings supplied as per certification by BEML. It is also not the case of the department that they have received some other patterns for the manufacture of castings additionally to the initial order and certificate by the customer i.e. M/s. BEML. The appellants have amortised the full value of patterns supplied to them by their client. It is neither legal nor proper to ask the appellants to continue the amortisation while clearing the additional castings using the same patterns whose value has been already amortised. It is not the case of the department that the appellants have received new set of patterns whose value remains to be amortised. It is also not the case of the department that the appellants received any additional consideration for the same patterns. Under the circumstances, it cannot be said that the appellants have evaded duty by not amortising the patterns received by them. The demand confirmed cannot be upheld to be legal and proper. When the demand becomes not sustainable, interest and penalty etc. confirmed cannot be sustained - Appeal allowed - decided in favor of appellant.
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