2018 (6) TMI 1728 - AT - Central Excise

Tribunal overturns order on excise charges, excludes development costs

M/s Hindustan Safety Glass Works Ltd. Versus CCE, Kolkata-III

The Tribunal allowed the appeal, setting aside the order confirming demand, penalty, and interest under the Central Excise Act, 1994. The decision ... Valuation - inclusion of development charges i.e. cost of dyes and moulds in the assessable - HELD THAT:- This is second round of litigation before this Tribunal on the issue regarding includibility of the development charges in respect of dies and moulds. It is on record that the mould etc. have not been manufactured by the appellant and has been provided by their client for use in their factory in the manufacture of the excisable goods for them. Therefore, the question of charging duty on the goods which has been capitvely consumed does not arise at all in view of Notification No. 67/1995. Appeal allowed - decided in favor of appellant. Issues:1. Confirmation of demand along with penalty and interest under Central Excise Act, 1994.2. Allegation of contravention of Central Excise Rules related to realization of cost of moulds/samples/prototype.3. Inclusion of amortized cost in assessable value of products manufactured using moulds.4. Dispute over development charges to be included in assessable value.5. Comparison with a previous case regarding inclusion of development charges.6. Decision on the includibility of development charges in respect of dies and moulds.Analysis:1. The appeal challenged the confirmation of demand, penalty, and interest under the Central Excise Act, 1994, in compliance with a previous CESTAT order. The appellant was engaged in manufacturing safety glass falling under specific sub-headings. The show cause notice alleged contravention of Central Excise Rules regarding the realization of costs of supplied moulds/samples/prototype. The appellant argued that duty payment was not required as the cost was incurred by customers and moulds were not cleared from the factory.2. The Hon'ble CESTAT, in a de novo order, emphasized the inclusion of amortized cost in the assessable value of products manufactured using moulds. The matter was remanded for a fresh decision by the Commissioner, ensuring the appellant's effective hearing. The appellant contended that the development charges should not be included in the assessable value, citing a settled legal position and non-removal of moulds from the factory.3. The Departmental Representative relied on a previous case where non-disclosure of development charges in the assessable value justified the order confirming the charges. However, the Tribunal noted that the appellant did not manufacture the moulds provided by clients for manufacturing excisable goods, making duty on captively consumed goods unnecessary under a specific notification.4. Ultimately, the Tribunal allowed the appeal, setting aside the impugned order and emphasizing that the inclusion of development charges in the assessable value was not warranted due to the specific circumstances of the case. This decision marked the second round of litigation on the issue, with the Tribunal ruling in favor of the appellant based on the unique facts presented.Conclusion:The judgment centered on the inclusion of development charges in the assessable value of products manufactured using moulds, with the Tribunal ultimately ruling in favor of the appellant based on the specific circumstances and legal provisions cited. The detailed analysis highlighted the key arguments, legal precedents, and the Tribunal's rationale in arriving at the decision to allow the appeal.