9911796707
TMI Blog2024 (8) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... orders from the Army for supply of pre-fabricated shelters; however, while discharging duty, they have only on the parts and components manufactured by them in their factory against the supply and claimed that the other items were bought out items; as the respondents are supplying the entire prefabricated shelters as per the work order given by the Indian Army, Revenue entertained an opinion that the value of such bought-out items should be included in the assessable value; a Show Cause Notice dated 05.07.2011 demanding Central Excise duty amounting to Rs.1,29,42,111/- along with interest and penalty was issued to the appellants; learned Commissioner of Central Excise, Rohtak vide impugned order dated 28.02.2013 dropped the proceedings hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y were only accessories and not essential parts of the shelters; it is obvious that the respondents have split up the price to evade payment of Central Excise duty. He relies on the following cases and submits that the value of the bought-out items requires to be included in the assessable value. Mittal Pipe Manufacturing Company - 2002 (146) ELT 624 (Tri. Delhi) upheld by Hon'ble Supreme Court - 2008 (231) ELT 196 (SC) National Steel Industries - 1999 (111) ELT 80 (Tri.) Kerala State Electronics Development Corporation - 1994 (71) ELT 508 (CEGAT) Frick India Ltd. - 2007 (216) ELT 497 (SC) 3. None for the respondents. Heard learned Authorized Representative for the Department and perused the records of the case. It is seen that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture of such goods. With chargeability, question of quantification of duty comes in. Classification decides the applicable rate. It is followed by valuation i.e. value on which the rate is to be applied. The concept of "classification" is, therefore, different from the concept of "valuation". In the present matter there is confusion in application of the aforestated two concepts by the Commissioner. In our view, the thrust of the show cause notice is towards undervaluation and not classification. This is made clear even in the order of the Commissioner vide para 53 which reads as under: "53. On consideration of the arguments of both sides and the facts on record I find that show cause notice dated 1-10-86 proposed classification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpretative Rules do not provide guidelines for valuation of excisable goods as they decide classification of a product under different headings/sub-headings of the tariff. Lastly, under Note 2(a) to Section XVI of the Central Excise Tariff Act, 1985 as well as Note 2(a) to Section XVI of HSN read with Explanatory Note referable to Parts of a Machine in HSN clarifies that payment of duty at the appropriate rates, relevant to the respective headings alone, shall apply. In the present case, as stated above a complete compressor stood cleared under tariff Heading 84.14. Duty has been paid thereof. Similarly, safety valves were cleared by the assessee on payment of duty under tariff Heading 84.81. Lastly, filters were also cleared by payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en considered by the Commissioner, therefore, in addition to the question remitted by CEGAT to the Commissioner we also direct the Commissioner to de novo consider the question of valuation. In this connection, the Commissioner will call for the cost statements and shall also ascertain the manner in which the assessee has priced its goods. The Commissioner may also consider invocation of Section 14A of the Central Excise Act, 1944 which deals with "special audits in certain cases". In our view, in the present matter "costing" as a concept will play an important role and, therefore, if the Commissioner so deems fit he can order special audits and call for the report of the cost accountant to assist him (Commissioner) to arrive at the correct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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