TMI Blog2017 (5) TMI 1019X X X X Extracts X X X X X X X X Extracts X X X X ..... rm the buyer to the appellant and should have been added in the transaction value of the said machinery for the purpose of payment of central excise duty in terms of Rule 6 ibid of the valuation Rules and by not doing so, the appellants had certainly undervalued their goods, resulting into short payment of duty of ₹ 8,31,667/-. Therefore, the demand of duty of ₹ 8,31,667/- is legally sustainable and does not suffer from any legal infirmity - There was certainly suppression of facts on the part of the appellants and hence the extended period of limitation is rightly invokable - equal penalty u/s 11AC also confirmed - demand upheld. Whether the inputs which have been cleared as such without being any activity by the appellant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the appellant is engaged in the manufacture of metal rolling mills and parts thereof. During the visit of the Central Excise officers to the factory on 14.2.2006, it was found that in few cases the appellants had cleared the goods without including the value of material supplied free of cost to them by their buyers on returnable store challans. The appellants had received certain parts free of cost from their buyers against challans carrying out the manufacturing processes and after manufacturing the fully finished goods, dispatched the same to their buyers after paying Central Excise duty excluding the value of inputs supplied to them free of cost by buyers against returnable challans. Therefore, it was alleged that the transaction val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 002. Accordingly the show cause notice was issued to the appellants which was adjudicated, the demands on account of undervaluation as well as denied the benefit of Notification No.58/03-CE dated 22.7.2003 were confirmed along with interest and penalty was also imposed on them. Aggrieved from the said order, the appellants preferred an appeal before the Commissioner (Appeals) who confirmed the demand and dropped the part of the penalty and the said order has been challenged before us. 4. We find that in this case, two issues emerge: (a) Whether the raw material was supplied free of cost by the buyers is required to be added in the assessable value or not? (b) Whether the inputs which have been cleared as such without being any acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms relatable to such goods, whether supplied directly or indirectly by the buyer free of charge or at reduced cost for use in connection with the production and sale of such goods, to the extent that such value has not been included in the price actually paid or payable, shall be treated to be the amount of money value of additional consideration flowing directly or indirectly form the buyer to the assessee in relation to the sale of the goods being valued and aggregated accordingly. In the instant case, the value of the materials, components, parts supplied free of cost by M/s.Jindal Stainless Steel Limited, Hissar (the buyer) to the appellants for use in the machinery manufactured on their behalf, was additional consideration flowing dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the buyers to the appellants consequent to the terms and condition of the said purchase orders. In the present case, the duty discharged at the stage of the appellants was the final duty paid on the impugned goods and it is not the case here that the buyers (i.e. M/s.Jindal Stainless Steel Limited) had discharged the duty on the said goods by adding the value of the components/parts supplied by them free of cost to the appellants. As per value Valuation Rules, the value of the components/parts supplied free of cost to the appellants, was required to be added in the transaction value of the goods (machinery) so supplied by the appellants and the adjudicating authority has rightly held that the appellants had undervalued their goods manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid observations of the Commissioner (Appeals) and held that the value of free supply of raw material made by the buyers to the appellants are not required to be added in the assessable value of the goods, therefore, we do not find any infirmity in the impugned order. Accordingly, the impugned order on the issue No.1 is upheld. Issue No.2. 7. We find that it is admitted fact that the appellant has cleared the inputs as such, and availed Cenvat credit thereon against domestic procurement certificate under Notification No.58/03-CE dated 22.7.2003. To avail the benefit of the said notification, the goods shall be produced or manufactured by the appellant which is not done in the instant case. We hold that the benefit of Notification No.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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