TaxTMI 
TaxTMI 
2025 (2) TMI 5
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.... are manufacturing large assembly parts for motor vehicle and supply to the manufacturers. Appellant have no direct commercial relation with the automobile manufacturers like M/s. Toyota Kirloskar Ltd., and M/s. Hyundai India Ltd. 3. During the course of Audit of the Appellant by the department, it is observed that moulds were supplied to the appellant free of cost by their customers viz., M/s. TGI Kirloskar Motors Pvt. Ltd. M/s. Matherson Automotive Technologies and Engineering, etc., to manufacture parts and accessories of motor vehicles like grills, emblem, etc., as per their specification. It was further observed that the value of the moulds was not included for arriving at the transaction value as per Section 4 of Central Excise Act, 1944. Accordingly, further investigation was conducted and on conclusion of the investigation, show cause notice was issued. Thereafter Adjudication authority as per the impugned order confirmed demand of duty of Rs. 4,17,99,337/- on the amortized value of moulds of Rs. 34,01,11,543/- for the period from June 2011 to November 2015 along with interest and imposed penalty of Rs. 4,17,99,337/- under section 11AC of Central Excise Act, 1944. Aggrieve....
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....tized value of the moulds in the value of the finished products in the hands of the Appellant. As per the finding of adjudication authority, even if the goods were supplied by the customer, whether it be inputs or mould as free of cost, but the similarity ends there. The concept of amortization of cost cannot be confused with the value addition of inputs used in the manufacture of final products. Amortization is an accounting concept in which the cost of fixed assets is apportioned over a period of time during its useful life. The Ld. Counsel submits that the above said finding by the Adjudication authority is unsustainable. As per the judgment of the Hon'ble Supreme Court, there has to be a clear distinction between the duty liability of a final product manufacturer and an intermediate product manufacturer. As per the above judgement, when the final product manufacturer works under the MODVAT Scheme, it is was categorically held that an intermediate product manufacturer like Appellant cannot be asked to pay duty on free inputs received under Rule 57F(2) under erstwhile Central Excise Rules, 1944, when the final product manufacturer was working under MODVAT Scheme as intermediate p....
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....ent, artwork, design work and plans and sketches undertaken elsewhere than in the factory of production and necessary for the production of such goods. Explanation 2 .... Illustration 1...... Illustration 2........ The section 4(1)(b) along with the explanation there under stipulates that where the price is not the sole consideration, the value shall be determined in the prescribed manner. 8. The Ld. Counsel also draws our attention to the old provision:- RULE 57F. Manner of utilisation of the inputs and the credit allowed in respect of duty paid thereon. (1) The inputs in respect of which a credit of duty has been allowed under rule 57A may- (i) be used in, or, in relation to, the manufacture of final products for which such inputs have been brought into the factory; or (ii) be removed, subject to the prior permission of the Collector of Central Excise, from the factory for home consumption or for export on payment of appropriate duty of excise or for export under bond, as if such inputs have been manufactured in the said factory: Provided that where the inputs are removed from the factory for home consumption on payment of duty of excise, such duty of excise shal....
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....judgment of the Hon'ble Supreme Court in the matter of CCE & CE, Ahmadabad Vs. M/s Narayana Poly Plast -2005 (179) E.L.T 20 (SC). 12. Ld. Counsel for the appellant also submitted that Rule 4(5)(a) and Rule 4(5)(b) of the CENVAT Credit Rules as to be read with the Notification No. 214/1986-CE dated 25.03.1986 which has exempted the job worker from payment of duty in cases where the products manufactured by them are intermediate products which are used in the manufacture of the final products by the principal and pays the excise duty on the final product manufactured by them. In this regard, Ld. Counsel relied on the following decisions: 1. M. Tex & D.K. Processors (P) Ltd. Vs. Commissioner of C. Ex., Jaipur - 2001 (136) E.L.T. 73 (Tri. - Del.) 2. Mech Form Vs. Commissioner of Central Excise Daman - 2014 (309) E.L.T 492 (Tri. - Ahmd.)- affirmed by Supreme Court Commissioner Vs. Mech Form - 2015 (320) E.L.T A180 (S.C.)" 13. The Ld. Counsel further submits that demand is confirmed by invoking the provision under Rule 4(1) B. However, the issue is squarely covered under the provisions of Section 4(1)A of the Central Excise Act and the demand is confirmed by invoking the wrong prov....
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.... are valued taking into consideration the availability of the mould. If the mould has not been made available to the customer, the assessee could not have manufactured the components as per the requirement of the customer. Therefore, the value of the mould must be considered while assessing the value of the finished products. If the moulds were not supplied by the customer, the value of the finished product would have been far greater than the amount fixed between the assessee and the customer. Therefore, the provision of moulds influenced the price of goods supplied by the assessee. Thus adjudication authority held that transaction value as per Section 4(1)(a) cannot be accepted and the valuation of the finished goods has to be done in terms of Section 4(1)(b) of the said Act r/w Rule 6 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. As regarding judgment of International Auto (supra), it is considered under Rule 57F (2) of Central Excise Rules, 1944 and as per the decision of the Tribunal in the matter of Bhor Industries Ltd. Vs. CCE, Pune - II reported at 2017 (349) E.L.T. 753 (Tri.-Bom., Rule 57F (2) of Central Excise Rules, 1944 is not pari....