TaxTMI 
TaxTMI 
2008 (6) TMI 483
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntral Excise Rules, 1944, together with interest under Sec. 11AB and penalty of amounts equal to duty under Sec. 11AC ibid on the manufacturer - the duty demands have been confirmed on the ground of under-valuation of automobile components manufactured by the appellants on job work basis for M/s. Mahindra & Mahindra Ltd. (hereinafter referred to as M/s. M&M) by non-inclusion of value of scrap not returned to raw material suppliers but sold by the appellants, in the assessable value of the goods manufactured on job work basis - according to the Revenue Rs. 7500 PMT which was the value at which the scrap was sold by the appellants formed part of the conversion cost and was, therefore liable to be included in the assessable value of the motor ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tice of non inclusion of the scrap credit in the cost of raw materials and conversion charges was based not only on general cost accounting, but also the Tribunal's decision in Hindustan Engineering. In Sept. 2003, the Tribunal held in the case of the same assessee [decision reported in 2003 (157) E.L.T. 435] that value of scrap was not required to be included in the value of components manufactured on job work basis. There was no contrary decision at that point of time and it was only on 10-3-05 that the Apex Court held in the case of General Engineering Works v. CCE, Jaipur [2007 (212) E.L.T. 295 (S.C.)] that the value of scrap was required to be included in the assessable value of goods manufactured and cleared on job work basis. The fac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s such Musco undervalued the goods. The statement of Shri L.N.S. Iyer, Sr. Manager (Accounts) was recorded under Section 14 of Act on 27-9-99 wherein he inter alia stated that the cost of material is worked as raw material cost + Conversion charges + packing (if any) + Tool amortization cost - Value of scrap generated (i.e. scrap credit). He aiso stated that the scrap credit is deducted from assessable value of M.V. parts @ 7500/- per M.T. In his further statement dt. 12-10-99 he submitted sample copies of purchase orders and admitted that although they have done these manufacturing activities on job work basis, they have not filed recuisite price declaration. Further in his statement dt. 17-1-2000, he stated that on pointing out the sai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....00/- per MT from the assessable value as done by the assessee, is unmaintainable and that the claim of the department to load the assessable value with this much portion is well substantiated, fully tenable and justified. Relevant portion of CESTAT's Order dated 2-9-2003 [2003 (157) E.L.T. 435] is extracted below :- "2. The major demand of Rs. 1,90,70,826/- in respect of the issue at (1) above. The appellant company manufactures motor vehicle parts on job work basis out of raw materials supplied by M/s. Mahindra & Mahindra. The question that has been raised concerns as to whether the assessable value of the motor vehicle parts should include the raw material cost plus job charges and in addition, the value realized by the appella....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the scrap cannot be added to the value of the motor vehicle parts as it forms no part of it. Separate duty is in any case being paid on the value of scrap at the rate applicable to such scrap. In view of our findings above, we are of the opinion that the impugned order confirming the duty demand including the value of scrap in the assessable value of motor vehicle parts is not sustainable nor also the penalties imposed on the appellant unit and its officials on this count." This establishes that the issues involved in the present appeals and the earlier one are identical. 5. The appellants cannot be faulted in following the practice as was upheld by the Tribunal in its order reported in 2003 (157) E.L.T. 435 and the appellants ar....