TaxTMI 
TaxTMI 
TaxTMI 
2012 (11) TMI 358
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....at appellants are engaged in the manufacture of Lifts and Elevators and Parts thereof falling under Chapter Heading No. 8428 and 8431 of the First Schedule to the Central Excise Tariff Act, 1985 and they were availing the MODVAT/CENVAT Credit facility under the provisions of Rule 57A/57B of the Central Excise Rules, 1944 read with Rule 3 of the CENVAT Credit Rules, 2002. During the course of audit for the period 26th July 2000 to 17th August 2000, it was observed that they had entered into works contract with the customers for erection and installation of lifts and elevator and the contract cost included various components like designing, manufacturing, erection etc. It was observed that there was no assessable value available for the final....
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....t to be assessed can be included while determining the cost of production of the product. He therefore, emphasized that the royalty can only be included in the cost of production of product on which the royalty is paid. 4. He contended that since the royalty in the present case is paid on the value of works contract of the elevator and no royalty paid on parts and components which are subject matter of the demand, demanding the duty on the royalty by the department is not as per law. He further submitted that the royalty is paid by them on the basis of total sale price received by the appellant with regard to works contract. Royalty is also paid for technical assistance received by the appellant in connection with sales, installation ....
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....eiving the royalty charges from the customers besides the price of the goods these royalty charges are to be included in the assessable value. He submitted that this circular is not applicable to them as they are not receiving charges but they are paying royalty charges to the parent company. (2) Board Circular No. 258/92/96-CX., dated 30-10-1996 This circular is regarding the valuation of the goods captively consumed. (3) Board Circular No. 354/81/2000-TRU., dated 30-6-2000 This circular was issued when the new Valuation Rules came into w.e.f. 1st July 2000. He submitted that asse....
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.... of audit, short levy was deducted by the audit officers and on basis of which the show-cause notice was issued to the appellant. He therefore requested for dismissal of appeal. 7. After hearing both the sides, we find that the issue involved in the present case is regarding inclusion of the royalty charges paid by them to their parent company for getting technical assistance in the manufacture, sale, installation and service of the lifts in the assessable value of the parts/components of the lift, which are being assessed on the costing basis. The components manufactured by them in their Kandivali Unit are being cleared for captive consumption at site and the assessable value thereof is being computed on the basis of cost of producti....
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....e Valuation Rules and the value is being determined on the basis of costing basis after adding the profit element in the cost. After issuance of the circular in 2003 that costing is to be done as per the CAS4. It is quite clear that the amount of the royalty charges will be covered under the direct expenses and will required to be added to the cost of the product under assessment. Since under the disputed period the goods were being assessed on the basis of costing principles, there is no reason not to include the royalty charges to the cost of the product prior to issuance of the circular also. Since the cost of the product is being arrived for the purpose of determination of assessable value the same principles as mentioned in CAS4 are ap....