M/S. Perfect Mechanical Industries vs C.C.E. Delhi Iv

[Arising out of Order-In-Appeal No. 159/CE/Appl/DLH-IV/2009 dated: 26.11.2009 passed by Commissioner of Central Excise Faridabad]

Excise Appeal No. E/1573/2011-Ex[DB]

[Arising out of Order-In-Appeal No. 28/CE/Appl/DLH-IV/2011 dated: 31.03.2011 passed by Commissioner of Central Excise Faridabad]

Excise Appeal No. E/1292/2012-Ex[DB]

[Arising out of Order-In-Appeal No. 12/CE/APPL/DLH-IV/2012 dated: 01.02.2012 passed by Commissioner of Central Excise Faridabad]

Excise Appeal No. E/56015/2013-Ex[DB]

[Arising out of Order-In-Appeal No. 99/CE/APPL/DLH-IV/2012 dated: 30.11.2012 passed by Commissioner of Central Excise Faridabad]

Excise Appeal No. E/56016/2013-Ex[DB]

[Arising out of Order-In-Appeal No. 100/CE/APPL/DLH-IV/2012 dated: 30.11.2012 passed by Commissioner of Central Excise Faridabad]

For approval and signature:

Hon'ble Mr. Rakesh Kumar, Member (Technical)

Hon'ble Mr. S.K. Mohanty, Member (Judicial)

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. Perfect Mechanical Industries ...Appellants

Vs.

C.C.E. Delhi IV Respondent

Appearance:

Mr. D K Tyagi, Advocate for the Appellant

Mr. Yashpal Sharma, DR for the Respondent

CORAM:

Hon'ble Mr. Rakesh Kumar, Member (Technical)

Hon'ble Mr. S.K. Mohanty, Member (Judicial)

Date of Hearing/decision.12.02.2015

FINAL ORDER NO. 50410-50413 & 50424 /2015-Ex(Br)

Per Rakesh Kumar (for the Bench):

The appellant are a body builder who build body on the chassis received from the chassis manufacturers. The period of dispute in these appeals is from April 07 to March 11. During this period, the appellants in terms of their contract with M/s Ashok Leyland, and vehicle factory, Jabalpur had constructed body on the chassis received form M/s Ashok Leyland and vehicle factory Jabalpur. M/s Ashok Leyland and vehicle factory Jabalpur had cleared the chassis to the appellant on payment of duty. M/s Ashok Leyland and vehicle factory Jabalpur had received an order from the Directorate of ordnance services, New Delhi for supply of vehicles of certain specifications and while chassis had been manufactured by them, for construction of bodies on the chassis, the same had been sent to the appellant. The appellant constructed body on the duty paid chassis received from M/s Ashok Leyland and vehicle factory Jabalpur. The appellant did not avail any cenvat credit of the duty paid on the chassis. The complete vehicles manufactured after construction of the bodies were sent to vehicle factory Jabalpur or to the depot of Ashok Leyland, from where the vehicles were supplied to the Directorate of Ordnance Services, New Delhi.

The appellant discharged their duty liability by availing exemption notification no. 6/06-CE (Serial No. 41) and accordingly paid excise duty on the price at which the vehicles were supplied by Ashok Leyland and Vehicle Factory Jabalpur to Armed Forces minus the cost of chassis. In respect of the body constructed on the chassis received from Ashok Leyland, the Department view is that the case is covered by Rule 10A(ii) of the Central Excise Valuation Rules, 2000 and accordingly, the duty should be paid on 110% of the fabrication charges under Rule 8 of the valuation Rules. In respect of the body constructed on the chassis received from Vehicles factory Jabalpur, the Departments view is that the case is covered by Clause  iii of Rule 10A of the Valuation Rules and accordingly under Rule 8 of the valuation Rules, the duty should be paid on 110% of the fabrication charges. Since, the appellant had paid duty only on fabrication charges, that is, price at which Ashok Leyland/ Vehicle Factory Jabalpur supplied the vehicles to Directorate of Ordnance Services, New Delhi minus the cost of chassis, the differential duty was demanded by issue of Show Cause Notice, and accordingly the duty demands were confirmed by five separate orders passed by Assistant/Joint Commissioner along with interest and penalties were also imposed.

On appeals being field to Commissioner (Appeals) against these orders, the same were dismissed. Against these orders of the Commissioner (Appeals), these appeals have been filed.

2. Heard both the sides.

3. Shri D K Tyagi, Advocate, the Ld. Counsel for the appellant, pleaded that the appellant are eligible for notification no. 6/06-CE (Serial No. 41), as they have manufactured body on the chassis, out of duty paid chassis and have not availed Central Credit of the duty paid on the chassis, that accordingly, the appellant are required to pay duty only on the fabrication charges that is the difference between the price at which the vehicles were supplied by Ashok Leyland and Vehicle Factory, Jabalpur to Armed Forces minus the cost of chassis, that Rule 8 of the Central Excise Valuation Rules is not applicable at all to this case as this Rule is applicable only when the goods manufactured by a manufacturer are either used for consumption by him or on his behalf in the manufacture of other articles, that since in this case the vehicle manufactured by the appellant by constructing body on the chassis received from M/s Ashok Leyland and vehicle factory Jabalpur were returned to them and thereafter the vehicles were supplied by them as such to the Armed Forces, there is no captive consumption by the appellant or use of the goods manufactured by them on their behalf in the manufacture of any other goods, that therefore, Rule 8 of the Valuation Rules has absolutely no application, that the Tribunal in the case of Indian Extrusions vs CCE Mumbai reported in 2012 (283) ELT 209, Tri. Mum has held that Rule 10A(i) or 10A(ii) of Central Excise Valuation Rules 2000 are not applicable when the goods are not sold but are captively consumed by the principal manufacturer, that the same view has been taken by the Tribunal in the case of Rolastar (P) Ltd. vs CC Daman reported in 2012 (276) ELT 87, that appeals filed against this order of the Tribunal has been dismissed by the Apex Court vide judgment reported in 2013 (298) ELT A186 SC and that in view of the above submissions, the impugned orders are not correct.

4. Shri Yashpal Sharma, Ld. DR defended the impugned order by reiterating the findings of the Commissioner.

5. We have considered the submissions from both the sides and perused the records. The appellant are a body builder who construct the body, on the chassis received by them. During the period of dispute, the appellant had received duty paid chassis from M/s Ashok Leyland and vehicle factory, Jabalpur who had received orders from the Directorate of Ordnance Services, New Delhi for supply of certain types of vehicles. There is no dispute that M/s Ashok Leyland and vehicle factory, Jabalpur have cleared the duty paid chassis to the appellant and the appellant have not taken the cenvat credit of that duty and after constructing the body on the chassis, the complete vehicles were returned by them to the depot of M/s Ashok Leyland and vehicle factory Jabalpur from where the vehicles were supplied to the Directorate of Ordnance Services, New Delhi. The appellant undisputedly have paid duty on the fabrication charges in terms of notification no. 6/06-E (Serial No. 41) whose applicability is not disputed by the Department. The fabrication charges have been determined by subtracting the value of the chassis from the price at which the vehicles were supplied to Armed Forces by M/s Ashok Leyland and vehicle factory, Jabalpur. The Department seeks to demand duty on 110% of the fabrication charges by invoking Rule 8 of the Central Excise Valuation Rules. Rule 8 of the Central Excise Valuation Rules is applicable only when the goods manufactured by a manufacturer are captively consumed by him or by some other manufacturer on his behalf but this is not the case here as the appellant after manufacturing the complete vehicle by constructing the body on the duty paid chassis received by them, returned the complete vehicles to M/s Ashok Leyland/ vehicle factory Jabalpur who in turn supplied those vehicles to the Armed Forces. In view of this factual background the judgments of the Tribunal in the case of Indian Extrusions vs CE Mumbai (Supra), and Rolastar (P) Ltd. vs CCE Daman (Supra) would be applicable and the Rule 8 has no application. The judgment of the Tribunal in the case of Rolastar (P) Ltd. (supra) has been affirmed by the apex court vide judgment reported in 2013 (298) ELT-A-186 (SC). The impugned orders, therefore, are not sustainable. The same are set aside. The appeals are allowed.

(Dictated and pronounced in open court)

(S.K. Mohanty) (Rakesh Kumar)

Member (Judicial) Member (Technical)

Neha

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