TaxTMI 
TaxTMI 
TaxTMI 
2016 (12) TMI 324
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....d assembly of these on job work basis for appellant No. 2 - Ms. General Motors India Pvt. Ltd. (GMI). GMI are supplying raw materials on free of cost basis (FOC). GMI were procuring raw materials either indigenously or by import and were availing cenvat credit on them. The said raw materials were thereafter supplied to Avtec on payment of Central Excise duty. For payment of duty, the value is adopted by GMI on the basis of average moving price of raw materials. The duty paid materials were received by Avtec on which they take credit and use the credit for payment of duty on various goods manufactured on job work basis and cleared back to GMI. GMI, in turn take the credit of such materials received from Av....
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....e exercise is revenue neutral and in such situation there could be no malafide or suppression of fact in these transactions. Further, combined reading of Rule 4(5)(a) of Cenvat Credit Rules, 2004 with Rule 4(5)(6) will show that a manufacturer can send the inputs directly to the job worker for manufacture of intermediate product and bring the said intermediate product to the factory for further use in the final product. In such situation, the supplier of input has to pay duty on intermediate product if it is not used in the manufacture of final product. He relied on the decision of the Hon'ble Supreme Court in International Auto Ltd. 2005 (183) ELT 239 (S.C.). He further submitted that the reliance placed by original....
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.... duty is payable by the job worker and the intermediate product is duly used in the manufacture to final product by GMI, who discharged full duty liability. In the present case both the appellants independently involved in manufacture though on job work arrangements, chose to pay duty at the time of clearance of FOC materials by GMI and intermediate goods by Avtec. Hence, proper valuation has to be followed by both the parties in ascertaining the duty liability. Regarding the loading of value of FOC material on the ground of payment of royalty by GMI to ISUZU, the Ld. AR submitted that the technical knowhow is essential in the manufacture of intermediate as well as final product and hence, should form part of the value for....
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.... mandated by the law. However, the same could be a defense, if at all, against imposition of penalty under the ground of misrepresentation, fraud etc. 10. It is also clear that the value of FOC materials could be only determined by GMI and it is not at the hands of Avtec to ascertain the background details of how GMI arrived at such value. Avtec received the materials along with covering invoices showing value and duty payment. Having bonafidely taken into account such value and also availed the credit of such goods, the said value has been added while arriving at the final value of intermediate goods. In such situation, we find that the question of fraud, suppression etc. cannot be invoked against Avtec. ....
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.... to entire model of car and not for transmission assembly only. The agreement encompasses a host of activities for the entire vehicle, whereas in the present case Avtec are not engaged in the manufacture of entire vehicle and they are involved only in manufacture of certain intermediary transmission assembly etc. which goes into the manufacture of the vehicle. Further, we note provision of Rule 6 of Valuation Rules are applicable to situation where additional consideration is flowing from buyer to seller. In the present case admittedly GMI are providing certain drawings and designs to Avtec based on which the products are to be manufactured. We have perused the details of drawings and technology supplied by GMI to Av....