TaxTMI 
TaxTMI 
2026 (3) TMI 1446
X X X X Extracts X X X X
X X X X Extracts X X X X
....e moulds and dies, the appellant raises invoices on the customers collecting the cost of such tools along with applicable excise duty and thereafter retains the moulds and dies in their factory for use in manufacturing components for those customers. 2. During the audit of the appellant's records, the department observed that moulds and dies supplied by customers free of cost and retained in the appellant's premises were used in the manufacture of aluminium castings, but the amortised cost of such moulds and dies was not included in the assessable value of the castings cleared to their customers. The department therefore took the view that the value of such tools constituted additional consideration flowing from the buyer and required inclusion under Rule 6 of the Central Excise Valuation Rules, 2000 read with Section 4 of the Central Excise Act, 1944. Consequently, a show cause notice was issued demanding differential duty of Rs. 4,17,684/- for the period May 2010 to March 2015 along with interest and penalty by invoking the extended period under Section 11A of the Central Excise Act, 1944, which demand was confirmed and penalty imposed by the adjudicating authority and subsequ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ible in the assessable value of aluminium die-cast components manufactured by the appellant under Rule 6 of the Central Excise Valuation Rules, 2000 read with Section 4 of the Central Excise Act, 1944, and, ii. Whether the extended period of limitation under Section 11A of the Central Excise Act, 1944 and the imposition of penalty are sustainable in the facts of the present case. Issue No. (i) Whether amortised value of customer supplied dies and moulds is includible in the assessable value of die-castings. 8. We observe that the appellant manufactures aluminium die-cast components using moulds and dies developed as per the specifications of their customers. Such moulds and dies constitute essential production tools and are ordinarily dedicated to the manufacture of components required by particular customers. In industry practice, the cost incurred in the development of such moulds is recovered over the production life of the mould through the value of the components produced using them, a process commonly referred to as amortisation. In the present case, the moulds and dies were either supplied by customers free of cost or were manufactured by the appellant for tho....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....-Mum.), wherein the Tribunal held that inclusion of mould cost in the assessable value of finished goods was not justified in the particular facts of that case where the moulds had been cleared on payment of duty as independent excisable goods and ownership had passed to the customers. However, the said decision turned on its own factual circumstances. In the present case, the moulds and dies supplied by customers or retained in the appellant's premises are directly used in the manufacture of aluminium die-cast components for those customers and their cost forms part of the manufacturing cost of the finished goods. Per contra, the Revenue relied upon the Larger Bench decision in Mutual Industries Ltd. vs CCE, Mumbai 2000 (117) ELT 578 (Tri.LB), wherein it was held that moulds supplied by the buyer constitute additional consideration as they directly contribute to the manufacture of the goods and therefore their amortised cost, apportioned over the production obtained from such moulds, is required to be included in the assessable value. In these circumstances, the decision in Mega Rubber Technologies Pvt. Ltd. is distinguishable and the principle laid down in Mutual Industries Ltd.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecision in Vimal Moulders and the earlier decision in the appellant's own case clearly establish that the amortised value of moulds used in production must be included in the assessable value of the finished goods. 18. Following the ratio laid down in the above judicial precedents and applying the provisions of Section 4 read with Rule 6 of the Valuation Rules, we hold that the amortised value of dies and moulds supplied by customers or manufactured for customers and used in the manufacture of aluminium die-castings is includible in the assessable value of the finished goods. Issue No. (ii): Whether the demand is barred by limitation and whether penalty under Section 11AC of the Central Excise Act is sustainable 19. We now proceed to examine the issue relating to limitation as well as the consequential liability to penalty under Section 11AC of the Central Excise Act. We observe that the appellant has contended that the extended period of limitation invoked in the present proceedings is not sustainable as the department was fully aware of the relevant facts relating to valuation of the goods manufactured by the appellant. The appellant submitted that the accounting methodo....