2017 (1) TMI 533 - AT - Central Excise

Tribunal upholds demand, interest, penalties in Rule 10A case, dismisses appeal based on precedent.

The appeal was dismissed by the Tribunal, upholding the confirmation of demand, interest, and penalties imposed by the Additional Commissioner. The ... Valuation - inclusion of cost of motor vehicles chassis - Demand of duty, interest and penalty - Held that: - similar issue has come up before the Tribunal in the case of Audi Automobiles vs. C.C.E., Indore [2009 (5) TMI 426 - CESTAT, NEW DELHI], where the condition of interest and demand of duty was sustained and penalty was set aside and was held that the said firms had cleared the goods in relation to the body fabricating and mounting on the chassis which were supplied to the said firms free of cost by the manufacturer of chassis. Being so, the activity for the purpose of valuation would squarely fall under Rule 10A and not under Rule 6. We, therefore, do not find any illegality in the impugned order as far as the demand of duty and interest payable thereon from the appellants - as regards penalty, the appellant was seeking to claim benefit in terms of Rule 6. In the circumstances, we do not find any justification for imposition of penalty in the matter in hand. Appeal dismissed - decided against Appellant. Issues involved:Appeal against order of Commissioner (Appeals) setting aside penalty imposed by adjudicating authority. Contravention of Central Excise Rules and Act in relation to motor vehicles manufacturing and clearance. Cenvat credit availed on duty paid by manufacturer of chassis. Confirmation of demand, interest, and penalty by Additional Commissioner. Challenge to penalty imposition. Interpretation of job work under Rule 10A. Similar issue precedent from Audi Automobiles case.Analysis:Issue 1: Appeal against penalty setting aside by Commissioner (Appeals)The appellant filed an appeal against the impugned order dated 21.4.2010 passed by the Commissioner of Central Excise (Appeals), Jaipur, which only set aside the penalty imposed by the adjudicating authority. The appeal was based on the contravention of Central Excise Rules and Act concerning the manufacturing and clearance of motor vehicles.Issue 2: Contravention of Central Excise Rules and ActThe appellant, registered for manufacturing bus bodies, was involved in the clearance of motor vehicles. The adjudicating authority confirmed excise duty on the motor vehicles cleared during a specific period due to contravention of provisions of Rules 4, 6, and 8 of the Central Excise Rules, 2004, and Section 4(1) (b) of the Central Excise Act, 1944 read with Rule 10A of the Central Excise Valuation Rules, 2000.Issue 3: Cenvat credit availed on duty paid by chassis manufacturerThe appellant received motor vehicle chassis from Tata Motors Ltd., availed cenvat credit on duty paid by Tata Motors Ltd., and also on duty paid for other raw materials purchased. The appellant engaged in the fabrication of mounting bus bodies on the chassis, returning them to Tata Motors Ltd. after payment of duty based on the value calculated. Sales tax and VAT were paid only on body building charges, not on the manufactured motor vehicles.Issue 4: Confirmation of demand, interest, and penaltyThe Additional Commissioner, Jaipur confirmed a demand of Rs. 5,49,105/- along with interest and imposed penalties against the appellant and the Director. The Commissioner (Appeals) upheld this decision through the impugned order, leading to the appellant filing the present appeal challenging the confirmation of demand, interest, and penalties.Issue 5: Interpretation of job work under Rule 10AReference was made to the case of Audi Automobiles vs. C.C.E., Indore, where a similar issue was addressed. The Tribunal in that case upheld the demand of duty and interest but set aside the penalty. The Tribunal emphasized that the activity of fabricating and mounting bodies on chassis fell under Rule 10A for valuation purposes, not under Rule 6. The imposition of penalty was deemed unjustified due to the interpretation of the law and relevant precedents.Issue 6: Similar issue precedent from Audi Automobiles caseConsidering the identical facts and circumstances, the Tribunal found no merit in the appeal filed by the appellant-assessee and dismissed the same, following the precedent set by the earlier Audi Automobiles case. The appeal was thus disposed of accordingly.