TMI Blog2017 (3) TMI 996X X X X Extracts X X X X X X X X Extracts X X X X ..... - However, the quantification has to be done on factual and rational basis. Extended period of limitation - Held that: - AVTEC are not in the picture with reference to royalty payment for the whole vehicle by FIPL to FORD, USA in terms of the agreement between these two parties. In such situation, it is not correct to allege that AVTEC intentionally suppressed or mis- represented any facts relating to additional considerations to be added in the value of power units - extended period not invocable - penalties also set aside. Appeal disposed off - decided partly in favor of appellant-assessee. - E/57358/2013 and 57359/2013-EX(DB) - A/52138-52139/2017-EX[DB] - Dated:- 1-3-2017 - Hon ble Shri S.K. Mohanty, Member (Judicial) And Hon ble Shri B. Ravichandran, Member (Technical) Shri B.L. Narsimhan, Advocate for the appellant Shri Yogesh Agarwal, DR for the respondent ORDER Per B. Ravichandran These two appeals are against the common impugned order dated 8.2.2013 of Commissioner of Central Excise, LTU, New Delhi. The first appellant (M/s.AVTEC Ltd.) are engaged in the manufacture of auto parts like engine, transmission, assembly of engine and transmis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity is arbitrary and without any factual or legal basis. The Product Development Licence Agreement dated 1.4.2007 is in respect of technical information and assistance from FORD, USA with respect to entire manufactured vehicles and not for power units only. The assistance provided by FORD, USA covers various activities for the entire vehicle. The said technical information is also used by other vendors of FIPL manufacturing parts or components of FORD model cars. It is contended that, if at all royalty charges are to be added in the value of the power units, the same should be done proportionate to the value pertaining to power units to the value of car sold by FIPL, after deducting value of components supplied by FIPL; (b) There is no short levy of excise duty as the goods manufactured on job work basis by AVTEC for FIPL and the same could have been cleared without payment of duty under Rule 4 (5)(a) of Cenvat Credit Rules, 2004. The appellants substantially complied with the Credit Rules as job manufacturer and, therefore, no duty liability arises on such clearances.; (c) The demand covering the extended period is not sustainable as there is no case for mis-declaration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actured by FIPL. It is apparent that royalty charges paid by FIPL to foreign collaborators is with reference to the whole motor vehicles. Power unit is one of crucial and important main components of the motor vehicles. The same has to be made as per the exact design, specification and technical requirement suitable for use in the motor vehicles. In terms of the agreement dated 1.8.2006 between AVTEC and FIPL, it is very clear that the power units are to be made in accordance with the specifications, engineering drawings and other technical information provided by FIPL to AVTEC. It is clearly mentioned (in para 7.2. of the agreement) that FIPL shall provide free of charge of necessary drawings, design, process sheets, equality check sheets and other technical support required for manufacturing and supplying power units by AVTEC. Here, we note that the design supply by FIPL (drawing, design and technical know how ) cannot be considered as simple information of arithmetic dimensions. These are proprietary information obtained by FIPL from foreign collaborators and are provided to AVTEC in terms of an agreement. These are not general specifications of a free floating design available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en from finding of the Original Authority. We find that SCN proposed 3% as a round figure and added that this will be subject to revision on production of certificate of Cost Accountant by Avtec or GMI. However, the impugned order noted that no such documents was produced and hence, 3% was loaded. We find that such summary loading in the value of excisable goods in terms of Rule 6 is not legally sustainable. Accordingly, we set aside the said finding in the impugned orders and remand the matter to the original authority to arrive at the correct quantum of loading to be made for the design and drawing supplied by GMI to Avtec who manufactured the products on job work. 6. In the present case also, we find that the assessable value in respect of the power units manufactured and cleared by AVTEC and FIPL should include the value of design, drawing and technical know how supplied by FIPL to AVTEC. However, the quantification of such value, as adopted in the impugned order, is not legally sustainable. The impugned order records the submissions of the appellant to the effect that the quantification of such additional value should be on the same lines as adopted by FIPL for paying roy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etween these two parties. In such situation, it is not correct to allege that AVTEC intentionally suppressed or mis- represented any facts relating to additional considerations to be added in the value of power units. On these reasons also, we find the demand of extended period is not invokable against AVTEC. On the same reasoning, we find no penalty under Section 11 AC is imposable on AVTEC also under Rule 26 on FIPL. No malafide or fraudulent intent can be attributed to the appellants considering the facts and circumstances of the case, as narrated above. Penalties under Section 11 AC as well as under Rule 26 are imposable only when there is mala fide intent in order to evade duty or dealing with knowledge of offending nature of the said goods. We find that these ingredients are missing in the present case. We also rely on the decision of the Tribunal in Motherson Sumi Systems Ltd. 2002 (147) ELT 1121 (T) and the decision of the Hon ble Supreme Court in the case of CCE Vs. Textile Corporation Marathwada Pvt. Ltd. 2008 (231) ELT 195 (SC) 8. In view of the above analysis, we find that the value of technical know how, drawing, design provided by FIPL to AVTEC for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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