Commissioner of GST & Central Excise Chennai Versus M/s. Mahindra & Mahindra Ltd.
Central Excise
2018 (11) TMI 1136 – CESTAT CHENNAI – 2019 (365) E.L.T. 455 (Tri. – Chennai)
CESTAT CHENNAI – AT
Dated:- 12-9-2018
Appeal No. E/469/2011 – Final Order No. 42408/2018
Central Excise
Ms. Sulekha Beevi C.S., Member (Judicial) And Shri V. Padmanabhan, Member (Technical)
Shri K. Veerabhadra Reddy, JC (AR) for the Appellant
Shri Raghavan Ramabhadran, Advocate for the Respondent
ORDER
Per Ms. Sulekha Beevi C.S.
This appeal is filed by the department against the order of Commissioner of Central Excise who partly set aside the demand raised in the show cause notice.
2. The respondents are engaged in manufacture of motor vehicles. During scrutiny of ER-I Returns, for the months of December 2008, April 2009, June 2009 and November 2009, it was noticed that the respondents had removed 16 numbers of motor vehicles (prototypes) (2200CC – 7 Seater) to their unit Nasik on ret
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
issioner vide impugned order held that the valuation is to be done under Rule 4 and that Rule 11 r/w Rule 8 is not applicable. The assessable value adopted by the assessee was increased by the adjudicating authority and differential duty was confirmed under Rule 4. The assessee had paid the said enhanced differential duty. Aggrieved by the dropping of the demand as raised in the show cause notice as well as penalties, the department has filed the present appeal.
3. The ld. AR Shri K. Veerabhadra Reddy appeared and argued on behalf of the department. At the foremost, it was submitted by him that the respondents did not file any appeal or cross-objections and therefore the findings of the Commissioner that the goods (prototypes) are marketable and excisable requires no interference. The issue therefore is with regard to only valuation. The prototype motor vehicles were cleared by the respondents to their own unit at Nasik for testing their road worthiness as a prerequisite prior to manu
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
in the case of Indian Drug Manufacturers' Association Vs. Union of India – 2008 (222) ELT 22 (Bom.). The said case is relating to the value of physician samples and the goods cannot be compared with that of the present goods. Another decision relied upon by the adjudicating authority is the case of M/s. VST Tillers and Tractors Ltd. Vs. Commissioner of Central Excise – 2003 (159) ELT 699. In the said case, the issue before the Tribunal was whether the IC engines consumed captively by the assessee can be valued on the basis of sale price of identical goods sold subsequently. In the present case, prototypes are not identical goods with the similar model motor vehicles sold subsequently and therefore the decision would not apply. When the prototype vehicles are sold for the purpose of testing of road worthiness, the situation is akin to the prototype vehicles being used / consumed in the manufacture of motor vehicles and therefore Rule 8 would be applicable for valuation. Thus, when there
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
t which the vehicles are likely to be sold after commencing commercial production was adopted by the respondent in terms of Rule 4 of Central Excise Valuation Rules 2000. Thus the case of the department that the prototype when used for testing is akin to captive consumption is a wrong allegation. The prototypes are not captively consumed and therefore Rule 8 is not applicable. The prototypes are not consumed by the respondents for manufacture of further motor vehicles. Such prototypes are final product by themselves and cannot be said to be consumed in the manufacture of further motor vehicles. That the allegation that the respondent ought to have adopted Rule 8 and CAS-4 is entirely wrong. He adverted to the Order-in- Original No.18/2010 dated 28.10.2010 in their own case passed by the Commissioner of Central Excise, Pune wherein on similar set of facts and issue, the adjudicating authority had dropped the proceedings. On the very same issue, another show cause notice was issued which
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
that has to be looked into is only with regard to the valuation of the prototypes. The department contends that the valuation under Section 4(1)(b) r/w Rule 11 and Rule 8 should be applied. It is pertinent to note that when the respondent was asked to submit CAS-4 statement, the assessable value has been arrived to be Rs. 71,14,198/- for one motor vehicle. At no stretch of imagination, the assessable value of similar model vehicle can be Rs. 71,14,198/-. It is to be noted that under Rule 126 of Central Motor Vehicle Rules, 1989, a prototype of every motor vehicle shall be subject to testing by designated Government Departments or Research Associations or Testing Institutes to ascertain the compliance of provisions of the Act and Rules. The said Act itself uses the word 'prototypes'. Only after certification by such authorities can the manufacturer of motor vehicles manufacture and market the motor vehicles. The similar model vehicles which are commercially manufactured can be said to b
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =