M/S. Man Industries (India) Ltd vs C.C.E. Indore

[Arising out of Order-in-Appeal No. IND-I/53/2006 dated 30.01.2006 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Indore].

For approval and signature:

Honble Shri Ashok Jindal, Member (Judicial)

Hon'ble Shri B. Ravichandran, Member (Technical)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

M/s. Man Industries (India) Ltd. .Appellants

Vs.

C.C.E. Indore .Respondent

.

Appearance:

Shri Manish Saharan, Advocate for the Appellant

Shri M.S. Negi, DR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble Shri B. Ravichandran, Member (Technical)

Date of Hearing: 30.07.2015

FINAL ORDER NO. 52411/2015-EX(DB)

Per Ashok Jindal:

The appellant is in appeal against the impugned order wherein duty has been demanded on die research and development charges recovered separately by the appellant by way of debit notes from the customers.

2. The brief facts of the case are that appellant is a manufacturer of aluminum profile, Bars & Rods, tubes & pipes, etc. On manufacture the said goods, as per the specifications of the customers, the appellant collected die research and development charges from the customers. The amount so collected was required to be added in the assessable value of the goods cleared by them. In these set of facts, during the course of investigation, it was found that appellant has not included the amount so collected in the assessable value of the section / profile. Therefore, the show cause notice was issued to the appellant to demand duty on this die research and development charges during the period 1999-2004 by invoking extended period of limitation. The show cause notice was adjudicated demand of duty on die development charges was confirmed by both the lower authorities along with interest and equivalent amount of penalty was also imposed. Aggrieved from the said order, the appellant is before us.

3. The Ld. Counsel for the appellant submits that it is admitted fact that appellant has collected certain amount towards die research and development charges during the impugned period and the same has not been included in the assessable value. He fairly admits that cost of die research and development charges was required to be amortized in their final product but the same has not been done. The lower authorities have neither demanded the duty on account of short payment on finished good for the amortized cost nor proposed in the show cause notice. Therefore, the demand cannot be confirmed on die development charges recovered by the appellant from the customers. To support his contention he relied on the decision of this Tribunal in the case of Ashok Iron Works Ltd. Vs. CCE Belgaum-2004 (168) ELT 198 (Tri-Mum).

4. On the other hand, Ld. AR submits that in that case it is admitted case of the appellant that they have not amortized the cost of die research development charges in the cost of their final product. Therefore, they have short paid the duty. He also admits that in the show cause notice the quantity of finished goods and value of clearance of the finished goods have not been mentioned. For that, the matter may be remanded back to the Adjudicating Authority for reconsideration of the issue and thereafter, to pass an appropriate order.

5. Heard the parties. Considered the submission.

6. We have perused the show cause notice. In the show cause notice, the duty has been demanded from the appellant on the amount collected towards die development charges by the appellant during the impugned period. No effort has been made in the show cause notice for amortization of the cost of die and development charges toward the final product cleared by the appellant. Therefore, the show cause notice is defective. If, in the show cause notice the cost of die and development charges had been amortized, in that case definitely, the appellant was liable to pay duty, on amortized cost but same has not been done. In these circumstances, we are bound to follow the decision of this Tribunal in the case of Ashok Iron Works Ltd. (Supra) wherein this Tribunal has observed as under:

We find that in this case development charges were recovered by the appellants separately. These developmental charges would have gone into the cost of the patterns manufactured and the duty could have been demanded only on the excisable goods, which were manufactured from these patterns developed by the appellants for manufacture of the casting. The number of casting which could have been manufactured from the patterns developed for which developmental charges were recovered was neither ascertained by the department nor the excisable goods which could have been manufactured from such patterns was worked out or called for from the appellants. Duty cannot be directly demanded on the developmental charges as these are not the excisable goods.

7. As in this case also, on the cost of amortization, the duty has not been demanded on the final product cleared by the appellant, therefore, the demand of duty on die development charges is not sustainable.

8. In these terms, we set aside the impugned order and allow the appeal with consequential relief if any.

0

(Dictated and pronounced in the open court)

(B. Ravichandran) (Ashok Jindal) Member (Technical) Member (Judicial)

Bhanu

4

E/1939/2006-EX(DB)