Mahindra & Mahindra Ltd vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. II

APPEAL No.E/31/07

(Arising out of Order-in-Original No.627/60/V/2006/COMMR/RH dated 04/10/2006 passed by Commissioner of Central Excise, Mumbai)

For approval and signature:

Honble Mr. Anil Choudhary, Member (Judicial) Honble Mr. Raju, Member (Technical)

1. Whether Press Reporters may be allowed to see :No 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 :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

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

4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================

Mahindra & Mahindra Ltd., Appellant Vs. Commissioner of Central Excise, Respondent Mumbai

Appearance: Shri.M.H. Patil, Advocate with Anil R Wani, Advocate for appellant Shri.V.K.Shastri, Asst. Comm. (AR) for respondent

CORAM: Honble Mr.Anil Choudhary, Member (Judicial) Honble Mr. Raju, Member (Technical)

Date of Hearing : 07/08/2015 Date of Decision : 07/08/2015

ORDER NO

Per: Raju

1. The appellants are situated at OTIS premises are manufacturing crank cases by the process of machining. The unmachined crank cases are supplied by another unit of same company, namely, Mahindra and Mahindra, located elsewhere, which manufactures tractors. The machined crank cases are used by the said unit for manufacture of the Tractors, which were then cleared on payment of duty. A notice was issued seeking to challenge the Assessable value for captive consumption declared for the crank cases manufacture by the appellants. It was alleged that while calculating the Assessable Value the appellants have failed to add in the said value the expenses incurred on

i) R&D Expenses,

ii) Head Office Administrative Overheads,

iii) Interest and

iv) Proportionate profit margins.

2. The adjudicating authority confirmed the said demand. The appellants appealed before the CESTAT where the order was set aside and the matter was remanded for fresh adjudication after considering the provisions of CAS-4 standard. The Commissioner in the adjudication dropped the demand in respect of Interest component and profit margin but confirmed the same for rest of the components.

3. The exclusion of the component of Head Office Administrative Overheads was rejected on the ground that only Head Office Administrative Overheads relating to marketing, project management, corporate office expenses etc can be excluded from value but those relating to manufacturing activities need to be included in value. Since the appellants have failed to produce the evidence that Head Office Administrative Overheads were only for corporate office expenses and not for manufacturing the same were included in Assessable Value. With respect to R&D expenses also it was alleged that the appellants have not produced the evidence that the said expenses were not in respect of the said Crank Cases therefore the said expenses were also included in the value.

4. The learned counsel for the appellants pointed out that the appellants have during the personal hearing held on 5.9.2006 before the Commissioner of Central Excise Mumbai V have submitted a Synopsis (annexed as Annex X to the paper book). The said synopsis includes a Cost Accountants certificate dated 16 Dec 2005 wherein the Cost Accountant has, in respect of Interest, Head Office Administrative Overheads and R&D Expenses, certified that:

We have verified the above with reference to the books of account maintained by the company and certificates showing cost of production produced before me. We are of the opinion, while working out cost of production the treatment of the above expenses is commensurate with recommendations of CAS-4

5. The learned AR reiterated the findings of the order in original.

6. From the discussion it is clear that commissioner had doubts about two components of expenditure. The Cost Accountants certificate submitted by appellants answered her doubts. The commissioner has totally disregarded the cost accountant certificate answering her queries without assigning any reason or data. If commissioner had any doubt about it she could have got it verified herself. Without such verification the certificate cannot be discarded. Since no reason has been assigned to discard the said Cost Accountant certificate the same needs to be accepted.

7. In view of above the appeal is allowed.

(Pronounced in Court)

(Anil Choudhary) Member (Judicial) (Raju) Member (Technical)

pj

1 4

Appeal No.E/31/2007