2012 (12) TMI 910

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....emand is arising out of addition of cost of certain drawings and designs to the transaction value of engineering parts supplied to various engineering contractors during 2006-07 to 2010-11. This value addition has been done under Rule 6 of the Central Excise Valuation Rules. It is at 10% of the sales turnover for the said period. The impugned order was passed in adjudication of a show-cause notice dt. 31.3.2011 which invoked the proviso to Section 11A (1) of the Central Excise Act on the alleged ground of "suppression or facts with intent to evade payment of duty". 2. The appellant is contesting the demands both on merits and on the ground of limitation. The gist of the submissions of their counsel is that no drawings or designs supplied....

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....ur attention to the terms and conditions of the transactions between the appellant and one of their buyers, namely, M/s.LNV Technology, and particularly refers to the terms and conditions pertaining to " engineering documentation". According to him, these provisions of the contract would clearly indicate that the appellant was required to use the drawings supplied by the buyer in the manufacture of the subject goods. Coupled with this document are there certain invoices also referred to by the learned DC (AR). One of these invoices was raised on LNV by the appellant and another one was raised by LNV on a cement manufacturing company. The latter invoice shows adjustment of 10% towards drawings. On the basis of these documents, the learned DC....

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....with the production and sale of the goods, has to be included in the assessable value of the goods. The case of the appellant before us is that they never used drawings or designs supplied by the buyers. Their case is that the composite drawings and designs which were received by their buyers from the latter's customers (cement/sugar manufacturers) were just passed on to the appellant and the appellant used a miniscule part of such drawings/designs to develop dimensional specifications. We have gone through the terms and conditions of the contract between the appellant and one of the buyers. These terms and conditions pertaining to "engineering documentation" prima facie indicate that the drawings supplied by the buyer had to be used by the....