TMI Blog2015 (1) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondent : Shri M. Rammohan Rao, DC (AR) JUDGEMENT Per P.K. Das; The relevant facts of the case, in brief, are that M/s. Mahindra and Mahindra Industries Ltd. (in short, M/s. Mahindra) and M/s. Hyundai Motors India Ltd. (in short, M/s. Hyundai) entered into an agreement with M/s. Durr GMBH, Germany (in short, Durr, Germany), separately for supply, design (drawing), supervision, erection, installation and commissioning of Paint Finishing System (PFS) in their work site at Maraimalai Nagar and Sriperumbudur respectively. 1.1 M/s. Durr, Germany, engaged their Indian representative M/s. Durr India Pvt. Ltd. (in short, Durr India) to identify the local suppliers for supply of components, fabrication items, installation, erection and commissioning of PFS as per drawing and design of Durr, Germany, at the work site of M/s. Mahindra and M/s. Hyundai and other services. M/s. Durr India identified the appellants herein for the performance of the job. 1.2 The appellants are engaged in the manufacture of fabrication of heavy engineering items viz. iron and steel structures, part of cement plant machineries, ESP components etc. classifiable under Chapter 73 and 84 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as under:- (a) The appellant had not received any money for drawing and design supplied for manufacture of the excisable goods and therefore there is no question of addition of any amount towards drawing and design charges to the price of storage tanks, boxes, steel structures etc. in determining the value of the goods. (b) The amount of ₹ 34,41,000/- (drawing charges) was not received by them and the drawing was received free of cost. (c) Show-cause notice proposed to invoke Rule 5 of old Valuation Rules, to add the drawing charges. In the present case, there is no material available of additional consideration flowing directly or indirectly from the buyer to the assessee and therefore Rule 5 of Valuation Rules cannot be invoked. (d) Without prejudice, the addition of value of engineering, development, art work, design work etc. necessary for the production of the goods has been incorporated under Rule 6 of the new Central Excise Valuation Rules, 2000. (e) Unless the consideration has been paid for design and drawing to the manufacture, who has manufactured and supplied excisable goods with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant-company and the other companies had given the figures in their statements and the adjudicating authority quantified the demand of duty as per the statement of the representative of the companies. He submits that the appellant had not disclosed the documents to the Central Excise officers. The learned AR relied upon the following decisions:- (a) Swil Ltd. Vs. CCE - 2001 (128) ELT 510 (b) Mahalakshmi Glass Works Ltd. Vs. CCE - 1998 (99) ELT 696 (c) Garlick Engineering Vs. CCE- 1998 (102) ELT 26 (d) Elecon Engineering Co. Ltd. Vs. CCE 2000 (124) ELT 762 (e) Macawber Beekay Ltd. Vs. CCE 2008 (229) ELT 404 4. After hearing both sides and on perusal of the records, we find that the main contention of the appellant is that the appellant undertook job work and paid duty on cost of raw materials and conversion charges as per the decision of the Hon ble Supreme Court in the case of Ujagar Prints Ltd. (supra). It is contended that the appellant had not received the money for drawing and design used in the manufacture of excisable goods and therefore the value of the drawing and design would not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufactured by L T; also, if the engineering and drawing were not supplied by MFIL and HMIL on free of cost, L T would be left with no option except to procure such engineering and drawing; certainly L T would have incurred the expenses for the same and, those expenses should have undoubtedly been taken into consideration for determining the assessable value for payment of duty. The decision in the above case was delivered by the Hon ble Supreme Court following the ratio of the decision in Ujagar Prints etc. Vs. UOI and other 1988 (38) ELT 535 (SC) and 1989 (39) ELT 493 (SC) which were also relied on by L T. In Ujagar Prints etc. 1989 (39) ELT 493 (SC) while disposing the CMP 32937 of 1988 filed by the Revenue, the Hon ble Supreme Court has given an illustration as follows:- If the value of grey cloth in the hands of the processor is ₹ 20/- and the value of the job work done is ₹ 5/- and the manufacturing profit and expenses for the process be ₹ 5/-, then in such a case the value would be ₹ 30/-, being the value of the grey cloth plus the value of the job work done plus manufacturing profit and expenses. This would be the correct assessable - value. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that the contract between the appellants and the customer was for consideration of Lead Annealing Bath, though the drawings were to be supplied free of cost by their customer. As such, it cannot be said that the ingredient of Section 4(1)(a), which required the price to be the sole consideration for the sale were available. The appellants, admittedly could not have manufactured the product in question without having the designs and drawing before them. As such, as held by the Larger Bench, it cannot be held in the circumstances that the price was the sole consideration so as to adhere to the provisions of Section 4(1)(a) and not to invoke Rule 5 of Central Excise Valuation Rules, 1975. Accordingly, no merits are found in the said contentions of the appellants also. 7. In the case of Macawber Beekay Ltd. (supra), the Tribunal held as under:- We have gone through copies of various supply orders produced by the appellant. As per the exclusion clause civil engineering work and erection of equipment is not part of the supply order or contract. Hence the contention of the appellant is that the drawing and design are in respect of the lay out of the equipment at sit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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