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CX – Fabrication of bodies of MV on duty paid chassis supplied free of cost by OEMs – job work activity is to be valued in terms of rule 10A of Valuation Rules: CESTAT

2019-TIOL-2513-CESTAT-DEL

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST BLOCK NO 2, R K PURAM, PRINCIPAL BENCH
NEW DELHI-110066

Ex. Appeal Nos. 50990 & 51329 of 2018

Arising out of Order-in-Appeal No. 21(SM)CE/JPR/2018, Dated: 30.01.2018 & O-I-O No. JAI-EXCUS-000-COM-41-17-18, Dated: 15.02.2018
Passed by the Commissioner (Appeals), Central Excise, Jaipur

Date of Hearing: 18.09.2018
Date of Decision: 18.09.2018

M/s KAMAL COACH WORKS PVT LTD

Vs

COMMISSIONER OF CGST
JAIPUR

Appellant Rep by: Shri Rahul Tangri, Adv.
Respondent Rep by: Shri B B Jain, AR

CORAM: V Padmanabhan, Member (T)
Rachna Gupta, Member (J)

CX – Appellant is engaged in fabrication of bodies of motor vehicles for original equipment manufacturers such as Tata Motors Limited [TML] – chassis was supplied free of cost by TML on payment of applicable CE duty on which CENVAT credit is availed by appellant – after building the body, the finished vehicles are cleared back to TML on payment of duty – duty was paid by appellant on the basis of cost construction, in line with the decision of the Supreme Court in the case of Ujagar Prints – 2002-TIOL-03-SC-CX-CB– however, revenue was of the view that the activity undertaken by the appellant is in the nature of job work and hence valuation is required to be determined in line with rule 10A of the CE Valuation Rules, 2000 and duty is required to be paid on the value at which the principal manufacturer sells the motor vehicle ultimately – SCNs issued and demands confirmed, therefore, appeal before CESTAT.

Held: This issue has been settled in various decisions -Tribunal has held that the valuation is required to be determined in terms of rule 10A of the CE Valuation Rules, 2000 and accordingly differential duty demand has become payable – accordingly, the adjudicating authority is directed to re-quantify and restrict the demand to the normal time limit – appeals are disposed of by way of remand: CESTAT [para 6, 7]

Matter remanded

Case laws cited:

Ujjagar Prints vs. Union of India – 2002-TIOL-03-SC-CX-CB… Para 2

Nizam Sugar Factory vs. CCE – 2006-TIOL-56-SC-CX… Para 4

FINAL ORDER NOS. 53022-53023/2018

Per: V Padmanabhan:

Excise Appeal No. 50990/2018 has been filed challenging the Order-in-Appeal No. 21/18 dated 30.01.2018 which has covered the period February, 2012 to August, 2014. On the same issue the second Excise Appeal No. 51329/2018 has been filed challenging the Order-in-Original No. 41/2017-18 dated 15.02.2018 which covered the period January, 2016 to June, 2017.

2. Brief facts of the case are that the appellant is engaged in fabrication of bodies of motor vehicles falling under Chapter heading 8704, for original equipment manufacturers such as Tata Motors Limited (TML). The chassis was supplied free of cost by TML on payment of applicable Central Excise duty on which the cenvat credit is availed by the appellant. After building the body, the finished vehicles are cleared back to TML on payment of duty. The dispute in the present appeals relate to the valuation adopted by the appellant for payment of duty on such manufactured motor vehicles. The duty was paid by the appellant on the basis of the cost construction, in line with the decision of the Hon’ble Supreme Court in the case of Ujjagar Prints vs. Union of India 1989 (39) ELT 493 (SC) = 2002-TIOL-03-SC-CX-CB . However, Revenue was of the view that the activity undertaken by the appellant is in the nature of job work and hence valuation is required to be determined in line with Rule 10A of the Central Excise Valuation Rules, 2000. As per this Rule 10A ibid the Central Excise duty is required to be paid on the value at which the principal manufacturer sells the motor vehicle ultimately. The show cause notices issued on the same were finalised and ultimately the appeals are before the Tribunal.

3. Heard Sh. Rahul Tangri, ld. Advocate for the appellant as well as Sh. B. B. Jain, ld. AR for the Revenue.

4. Ld. Advocate submitted that the issue on merits is decided against the appellant in various decisions of the Tribunal including the decision in the appellant’s own case reported as 2017 (1) TMI 533-CESTAT, New Delhi. However, he prays that the appellant will be entitled to the following reliefss:

(i) As held by the Tribunal in Final Order No. 52852/2018 dt. 24.08.2018 in the case of Commercial Engineers & Body Builders Pvt. Ltd. vs. CCE, Jabalpur, the appellant will be entitled to the benefit of cum duty price since the price at which TML has ultimately sold the motor vehicle, includes the excise duty and other taxes.

(ii) In respect of the Ex. Appeal No.50990/2018, the ld. Advocate submitted that the period covered in the show cause notice dated 17.04.2015 is beyond the normal time limit sanctioned by Section 11A. The same issue of valuation has been raised by Revenue by issue of various show cause notices right from 2008 onwards and hence in the light of the decision of the Hon’ble Supreme Court in the case of Nizam Sugar Factory vs. CCE, AP -2006 (197) ELT 465 (SC) = 2006-TIOL-56-SC-CX, the appellant will be entitled to the demand being restricted to normal time limited.

5. Ld. AR for the Revenue justified the impugned order.

6. The issue of valuation of the motor vehicles manufactured by the appellant, on job work basis on the chassis received after payment of duty from TML, has been settled in various decisions. The Tribunal has held that the valuation is required to be determined in terms of Rule 10A of the Central Excise Valuation Rules, 2000 and accordingly differential duty demand has become payable. In this connection, we reproduce the ratio of the decision in the case of Commercial Engineers & Body Builders (supra). In the final Order dated 2.11.2017, the Tribunal observed as under:

“4. After hearing Shri Hemant Bajaj and Dhruv Tiwari, learned advocates for the appellant and Shri H C Saini, learned DR for the department and on perusal of material available on record, it appears that identical issue has came up before the Tribunal in the assessee’s own case as Tata Motors Ltd. and Commercial Engineers & Body Builders Pvt Ltd. vs. CCE, Bhopal [Final Order No. 52044 – 52046 /2017 dated 28.2.2017] where it was observed that :-

“4. Both sides agree that identical issue in respect of the very same appellant was decided by this bench in final order No. 52503-52504/2016 dated 04.07.2016, wherein the bench remanded the matter back to the adjudicating authority for reconsideration of the issue. The said order has categorically stated that no penalty warrant in this case. The findings of the Tribunal in identical issue of the very same appellant are in Para 4 and 5, which are reproduced:-

“4. We do find force in the appellants submission that their contention regarding non-includability of taxes in the assessable value for determining the quantum of duty has not been adverted to by the primary adjudicating authority though the contention was raised before him.

5. In the light of forgoing, we allow the appeal by way of remand to the primary adjudicating authority with the following direction:-

(1) No penalty is warranted in these cases.

(2) The demand should be recomputed, if necessary, after considering the contention of the appellant regarding non-includability of taxes in the assessable value.”

5. In view of the above, we remand the matter back to the adjudicating authority. The adjudicating authority shall follow the directions given in the final order dated 04.07.2016 while computing the duty demand and follow the directions as indicated in our final order dated 04.07.2016.”

7. Accordingly, the adjudicating authority is directed to requantify and restrict the demand to the normal time limit. Appeals are disposed of by way of remand as above.

(Dictated and pronounced in the open Court)

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