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TMI Blog2013 (12) TMI 1453X X X X Extracts X X X X X X X X Extracts X X X X ..... components/parts had to develop certain tools and moulds for the manufacture of such parts. For the development of such tools/moulds, M/s. GMI has given an advance of Rs. 1,85,65,000/- to the appellant as 'tooling advance'. Appellant instead of developing the tools/moulds developed themselves got the same outsourced through its vendors, who used the same for the purpose of manufacture of various parts/components which are brought back to the appellant's factory and used in the manufacture of seats, etc., and cleared to M/s. GMI on payment of duty. In the process an amount of Rs. 1,52,35,971/- is paid to the vendors out of total tooling advance of Rs. 1,85,65,000/- received by the appellant from M/s. GMI and the remaining amount of Rs. 32,29,029/- is retained by the appellant. It is the case of the Revenue that entire amount of Rs. 1,85,65,000/- is required to be added to the assessable value of the seats manufactured by the appellant on amortized basis while discharging duty liability on the finished seats. 3. Shri Anand Nainavati (Advocate) appearing on behalf of the appellant argued that the entire amount of tooling advance is received by the appellant for developing tools ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seats manufactured by the appellant, is required to be added to the assessable value of seats and cleared by the appellant to M/s. GMI. Appellant argued that such an element on amortised basis was required to be added to the assessable value of the parts/components manufactured by the vendors, as done by TAFE, under Rule 6 of the Valuation Rules, 2000 and cannot be added to the assessable value of the finished seats. Appellant's argument could be true to that extent if duty was proposed by Revenue to be collected from the appellant with respect to parts/components manufactured by vendors. If the vendors have escaped non-payment of appropriate duty, by not including the amortised cost of tools/moulds, it does not mean that the said element of amortised cost will not enhance the cost of the components used by the appellant in the manufacture of the finished goods (seats). Accordingly, all such elements of amortised cost, required to be added to the assessable value of the components but was not so included, will enhance the value of the seats cleared by the appellant to M/s. GMI on payment of duty. In this regard, paras 4.1 and 4.2.1 of the OIO dated 29-9-2006 passed by the Adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 11AC of Central Excise Act, 1944 or under Rule 25(1) of Central Excise Rules, 1944. This plea of the Assessee is not acceptable as firstly revenue neutrality cannot be the ground for observance of mens rea and secondly the receipt of tooling advance of Rs. 1,85,65,000/- from M/s. GMI for developing tools/moulds for M/s. GMI for manufacture of components of the automobile seats/other interiors for M/s. GMI was never disclosed by the Assessee in the ER-1 returns filed by them or in any other communication from them to the Department and if this matter had not been detected by the officers of the DGCEI, the same would have remained unknown. Thus, the Assessee Company is guilty of not disclosing the vital information to the department and, therefore, longer limitation period of 5 years under proviso to Section 11A(1) would be available to the department for recovery of short paid duty and for the same reason the Assessee would also be liable for penalty under Section 11AC of the Central Excise Act, 1944 on this account. Besides this the Assessee would also be liable to pay interest at the applicable rate on this duty as per the provisions of Section 11AB of the Central Excise Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r assembled the automobile seats/other interiors or the Assessee company got the tools/moulds manufactured through those vendors. It was, therefore, the responsibility of the Assessee Company to ensure that the amortized value of the tools/machines got developed through their vendors for M/s. GMI is included in the value of the automobile seats/other interiors cleared by them to M/s. GMI. If the tooling advance had not been given by M/s. GMI to the Assessee Company for the manufacture of the tools/moulds for use in the manufacture of components of the automobile seats/other interiors, it is the Assessee Company which would have had to make the required investment for the development of such tools/moulds and this would have been reflected in the price of the automobile seats/other interiors being supplied by them to M/s. GMI. The Assessee Company obviously have been charging a lower price from M/s. GMI for automobile seats/other interiors in view of the tooling advance provided by M/s. GMI. Thus, the tooling advance of Rs. 1,52,35,971/- used for development of tools/moulds has influenced the price of the automobile seats/other interiors supplied by the Assessee to M/s. GMI and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation to Rule 6, it is seen that this rule applies to all the 4 clauses of the Explanation and to each entry in the Explanation. The enumerated list includes only money value of any additional consideration, which is not the same as money. Thus the additional consideration by way of money cannot be aggregated with the transaction value under Rule 6. Secondly, in the facts of this case, the Rule 11 read with Section 4(3)(d) of the Central Excise Act, 1944 seems to be more appropriate. In this connection, "transaction value" in Section 4(3)(d) may also be noticed. Section 4(3)(d) reads as follows :- "Section 4(3)(d) "transaction value" means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of the assessee, by reason of, or in connection with sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter, but does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s by the appellant to the buyer. Therefore, such advance/consideration received, irrespective of the purpose for which it has been used, will be includible in the transaction value on which excise duty liability has to be discharged." 7. So far as not quoting the provisions of Rule 11 of the Valuation Rules, 2000 and Sec. 4(3)(d) of the Central Excise Act, 1944 in the show cause notice is concerned, appellant argued that on this ground also demands and penalties are required to be set aside. It is observed from the judgment of Apex Court in the case M/s. N.B. Sanjana & Others v. M/s. Elphinstone Spinning & Weaving Mills Co. Ltd. [1978 (2) E.L.T. (J399) (S.C.)], followed by Gujarat High Court judgment in the case of M/s. Petlad Bulkhidas Mills Co. Ltd. [2000 (126) E.L.T. 269 (Guj.)], that quoting of a wrong provision of Law in the show cause notice, does not vitiate the proceedings. In Para 14 of Supreme Court's judgment in the case of M/s. N.B. Sanjana & Others v. The Elphinstone Spinning and Weaving Mills Co. Ltd. (supra) following Law has been laid down :- "14 We are not inclined to accept the contention of Dr. Syed Mohammad that the expression 'levy' in Rule 10 means ..... 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