TaxTMI 
TaxTMI 
1999 (4) TMI 287
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....4,13,200/-. Further a sum of Rs.4 lakhs was charged as service charges. In the show cause notice dated 6-3-1992, it was alleged that the conversion of the Honing Machine by the appellants amounted to the manufacture of a new machine and that the matter was not covered by the provisions of Rule 173H of the Rules. It was proposed that as against the declared value of Rs. 44,13,200/- (conversion charges), the assessable value be determined at Rs. 96,26,576.40/- (landed cost of Rs. 48,13,376.40 + conversion charges of Rs. 44,13,200 + service charges of Rs.4 lakhs). The Asstt. Collector of Central Excise, Kanpur, who adjudicated the matter held that as a result of conversion, new goods had been manufactured and that the landed cost of the original machine, material cost, service charges and packing charges were to be taken together to arrive at the assessable value. On appeal, the Collector of Central Excise (Appeals), Allahabad agreed with the adjudicating authority that the processes applied by the appellants with regard to the machine brought by them in their factory were the processes of manufacture. With regard to valuation, however, he was of the view that the original cost of the....
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.... blocks. For making the machine suitable for honing cylinder blocks also, a proposal was made by the appellants in consultation with their collaborators to re-make the old honing machine to make it suitable for honing cylinder blocks also. The appellants proposed to pay central excise duty on the various parts to be added. They filed a price list and sought approval for the price of Rs. 44,13,200/-. The assessable value of the machine when imported was of Rs. 25,33,356/- and with customs duty of Rs. 22,80,020.40/-, the landed cost (including customs duty thereon) was Rs. 48,13,376.40. In the show cause notice, it had been proposed that instead of Rs. 44,13,200/-, the assessable value was to be calculated with landed cost of machine + conversion charges + service charges equivalent to Rs. 48,13,376.40 + Rs. 44,13,200 + Rs. 4,00,000/- total Rs. 96,26,576.40. The appellants had admitted that central excise duty was payable by them but had contested the value on which the duty was leviable. 5. The appellants had sought permission to bring into their factory the machine which had earlier been imported by their customers, on the basis of the facts as given in their application. T....
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....er necessary : Provided also that in the case of goods or parts thereof which are not accompanied by duty paying documents, if the Collector is satisfied that the identity of the goods can be established by other collateral evidence he may by order and subject to such conditions as he may impose, relax the requirement of the production of duty paying documents. (3) The goods or parts thereof retained in, or brought into, a factory or warehouse in accordance with the provisions of sub-rule (2) may, if not subjected to any process amounting to manufacture, be removed from the factory or warehouse without payment of duty subject to such conditions as may be specified by the Collector." 6. On a perusal and on harmonious construction of the clauses of the above rule, it is clear that to avail of the benefit of the said rule, the process of remaking etc. should be such that it falls short of manufacture. A contention to the contrary ignores clause (3) of the said rule. Whether a process employed amounted to the process of manufacture had to be determined on the basis of all the relevant facts and circumstances in a particular case. The main consideration was whether th....
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....s relating to the landed cost observed that "it would not be just and proper to include its original cost in the assessable value for the purposes of assessment to duty". 10. He had held that the depreciation value of the machine should form part of the value of the new machine. In the depreciation value of the machine, the material cost of the components used and the service charges were to be included to arrive at the value of the new machine for the purposes of the assessment. 11. We find that although the adjudicating authority had referred to the packing charges of Rs. 50,000/- but while arriving at the assessable value of Rs. 96,26,576/- only the landed cost of the machine, material expenses in modification and the service charges had been taken into account. The packing charges had not been added in the value assessed. To that extent, the remand order had gone beyond the Order-in-Original against the appellants, on appeal by the assessee with no cross appeal by the Revenue. We modify the order to the extent that the packing charges of Rs. 50,000/- were not to be taken into account. 12. According to the Collector of Central Excise (Appeals), the deprec....