TaxTMI 
TaxTMI 
2026 (9) TMI 178
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....plicable interest and penalty under Section 11AC of the Central Excise Act, 1944, treating the advances as additional consideration. The appellant contended that the tooling cost was required to be amortised over the finished goods manufactured with the tools and that the proportionate cost had already been included in the assessable value. 2. The Adjudicating Authority, by Order-in-Original No. 15/2017-CE dated 10.03.2017, accepted the appellant's method of amortisation and dropped the proceedings. The Department challenged the same, contending, inter alia, that only Rs.15,892/- with interest had been paid towards amortisation and that the certificate relied upon was issued by a Chartered Accountant instead of a Cost Accountant. The Commissioner (Appeals), relying principally upon Circular No.170/4/96-CX dated 23.01.1996, remanded the matter for fresh determination of the amortised tooling value. The present appeal is against the said remand. 3. The Ld. Counsel Ms. Samyuktha Banusekar, for the appellant, submitted that the tooling advances themselves were not liable to be treated as assessable value and that only the proportionate cost of tools used in the manufacture of the....
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....interest and penalty are sustainable? Issue No. (i): Whether the tooling advances are includible in the assessable value in their entirety, or only the proportionate/amortised tooling cost attributable to the finished goods manufactured with the aid of the tools? 6. The dispute is not whether tooling cost has any bearing on valuation. The appellant itself accepts that the cost attributable to tools used in the manufacture of the finished goods has to be reflected in their assessable value. The controversy is whether the entire tooling advance can be treated as assessable value upon receipt or whether only the proportionate cost attributable to the finished goods manufactured with the aid of the tools is required to be included. 7. Section 4 of the Central Excise Act, 1944, as applicable during the relevant period, provides for determination of transaction value where the statutory conditions are satisfied. Rule 6 of the Central Excise Valuation Rules, 2000 provides for inclusion of the money value of additional consideration flowing directly or indirectly from the buyer. Explanation 1 to Rule 6 specifically refers to the value, "apportioned as appropriate", of tools, dies,....
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....uggested certificate into a statutory precondition for establishing valuation, particularly where other reliable documentary evidence is available. Further, the Circular specifically concerns patterns used in casting operations and cannot be treated as prescribing an inflexible evidentiary requirement for all forms of automobile tooling. 11. The documentary evidence on record is also material. The tooling records identify actual procurement and manufacture of tools through specialised vendors, including Maini Plastics, RGP Moulds Pvt. Ltd., Ankush Enterprises, Om Technocrat, SML Toolings, AVM Plastics, Divine Toolings, Kraftsman Tooling and Daechang India Seat Co. Pvt. Ltd., with descriptions and values of individual tools. The production records connect the tooling with manufacture of components and automobile seats. Payment records also corroborate receipt of tooling-related amounts. 12. More importantly, the record contains a supplementary Challan-cum-Tax Invoice No.15500009 dated 02.11.2015 referring to "tool amortization cost as per annexure", along with the corresponding assessable value and duty. The Chartered Accountant's certificate sets out the tool values, expected....
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....fore cannot be treated as assessable value merely because it was received from the buyer. The Order-in-Original, having considered the evidence and accepted the amortised valuation, was justified in dropping the demand proposed on the entire tooling advance. Issue No. (i) is answered in favour of the appellant. Issue No. (ii) : Whether the extended period of limitation is invocable and, consequently, whether the remand and the consequential liability to interest and penalty are sustainable? 16. The Show Cause Notice dated 14.12.2015 invoked the extended period under Section 11A(4) of the Central Excise Act, 1944 on the allegation that the appellant had suppressed the receipt of tooling advances. The allegation has to be examined in the light of the appellant's conduct and the Department's own knowledge of the transaction. 17. The record shows that the Department raised an audit objection on 23.10.2013 concerning the tooling advances and referred to the appellant's earlier decision in Lear Automotive. The appellant replied on 24.10.2013 and again on 26.11.2013, explaining that tooling development was in progress and that, after determination of the final tooling cost, the p....