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2015 (10) TMI 848 - CESTAT CHENNAI

2015 (10) TMI 848 - CESTAT CHENNAI - TMI - Levy fo penalty - differential duty paid was before issuance of SCN - Valuation - Non inclusion of amount received through debit notes - Held that:- The entire amount of duty demand relates to designing of dies and tools charges on which the appellants have paid the differential duty for the year 1998-2001 before the issue of first SCN. We do not find any evidence and moreover it is clearly certified by the chartered engineer in his affidavit dated 06.1 .....

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ember And Shri P.K. CHOUDHARY, Judicial Member For the applicant : Ms. Indira Sisupal, AC (AR) For the respondent : Shri M.Kannan, Adv., ORDER Per: R. Periasami The present Revenue appeal is against the OIA dated 6.8.2003, passed by the Commissioner (Appeals) and this Tribunal in final order No. 1666/ 2009 dated 10.11.2009 dismissed the revenue appeal. Consequent to the Hon ble High Court of Madras Order dated 12.03.2015 in CMA No. 1633/2010, filed by the Revenue, the appeal is taken up for deno .....

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admitted by this Court on the following substantial questions of law : 1. In the facts and circumstances of the case, whether the 2nd respondent can accept the incorrect statement given by the ld. Counsel 2. Why the value as per Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 should not be considered for the valuation of the impugned goods for demanding duty 2.The brief facts of the case are as follows : The first respondent/assessee is engaged in .....

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actured and supplied by them. Alleging that the assessee had not declared the correct assessable value, show cause notice was issued raising the following allegations : Further verification conducted revealed that M/s. SDL are realizing certain amounts towards manufacture and supply of excisable goods as per purchase orders issued by various customers from time to time. Over and above such purchase orders, M/s. SDL have also entered into agreements with various customers for compensation against .....

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nd development charges realized from the customers. Whereas it appears that design, drawing and development activities are directly relevant to the manufacture and supply of goods. Therefore, any charge representing design, drawing, development of product shall form part of the manufacturing cost and manufacturing profit of a product. The said activities are related directly to the manufacture and supply of goods. Hence it appears that the money value of such activities should form part and parc .....

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ed under Section 4(1)(a) of Central Excise Act, 1944. Thus the price of excisable goods for the purpose of levy of excise has to be ascertained under Section 4(l)(b) read with Rule 5 of Central Excise (Valuation) Rules, 1975. Therefore, an amount of ₹ 63,77,776/- realised towards design, drawing and development charges are required to be included in the price of the goods for the purpose of determining assessable value. The goods under reference falling under various chapters during the re .....

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use notice as to why (1) the differential duty amount of ₹ 9,56,666.40 detailed in Annexure A to this notice should not be demanded under proviso to Section 11A(1) of Central Excise Act, 1944; (2) a penalty should not be imposed under Section 11AC and under Rule 173Q of Central Excise Rules, 1944;(3) Interest on delayed payment of duty should not be demanded under section 11AB of Central Excise Act, 1944. 3.Thereafter, the case was adjudicated by the jurisdictional Assistant Commissioner .....

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DL could not establish the pro-rata amortization cost per piece through a legally sustainable manner, the entire cost of moulds are required to be amortized. 4. Accordingly, the Adjudicating Authority confirmed the demand together with interest and penalty. 5. Aggrieved by the same, the assessee preferred an appeal before the Commissioner (Appeals), who came to hold that the dispute between the Department and the assessee centers around the Chartered Engineers certificate and even if the Charte .....

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ing into consideration the amortization of cost of moulds. For better clarity, the relevant portion of the order of the Commissioner (Appeals) reads as follows : Further I agree that there is no possibility to demand duty on moulds, when the issue is regarding amortization of cost of moulds and inclusion of such amortization cost on the value of components. When the proceedings is for demanding duty on components, the order demands duty on the value of moulds. This totally unacceptable. Therefor .....

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an, ld. Counsel appearing for the respondents states that the respondents are not challenging the inclusion of amortised cost of mould in the value of the components and further states that the actual amortised cost has been so included for the relevant period. 4. In view of the fact that amortized cost of the mould has been included in the value of the components for the relevant period as stated by the ld. Counsel for the respondents, we see no reason to interfere with the impugned order passe .....

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e Tribunal could pass an order based on the statement made by the learned counsel for the respondent/assessee that the actual amortised cost has been included in the value of the components during the relevant period, which is not supported by any material. It is seen that the Tribunal has merely recorded the statement made by the learned counsel for the assessee and dismissed the appeal filed by the Department. In this view of the matter, the findings of the Tribunal appears to be based on conj .....

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onsideration. Accordingly the appeal was restored to its original number and taken up for denovo consideration. 2. Heard Both sides. 3. The Ld. AR reiterates the grounds of appeal filed by the Revenue and submits that the Commissioner (Appeals) allowed the assessees appeal entirely on different grounds that the department has demanded the duly on Moulds. He relied on the adjudication order dated 07.10.2012, where the adjudicating authority has demanded differential duty on the components. The ap .....

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he disputed period. 3. On the other hand, the Ld. Advocate submits that as per the Annexure A to the SCN, an amount of ₹ 63,77,776/- received from various customers for the period 1995-98 relates to design, drawing and development charges for dies and tools. He further submits that before issue of SCN they have paid the differential duty on the amortized value. He submits that a sum of ₹ 1,24,509/- was paid for the period April, 1995 to June, 1998 vide TR-6 challan dated 21.06.1998. .....

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authority has only rejected the certificate as it is undated. In support of that, the Ld. Advocate has filed affidavit of Chartered Engineer regarding authentication of the certificate He relied on Boards Circular No. 170/4/96 dated 23.06.1996 and on the following decisions in support of his contentions: 1. Kirloskar Ferrous Indus. Ltd. Vs. CCE, Belgaum 2005 (189) ELT 474 (Tri.-Bang.) 2. CCE, Madras Vs. Shardlow India Ltd. 1999(110) ELT 772 (Tribunal) 4. We have carefully considered the submissi .....

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3,77,776/- was received from various manufacturers pertains towards design, drawing and development charges for dies and tools that are used in the manufacture of excisable goods manufactured and supplied by them. The original demand was made on the ground that this amount was not included in the cost of the components. We find that the adjudicating authority in his order has not considered the chartered engineers certificate on the ground that the certificate was undated. On perusal of the cha .....

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