By TIOL News Service

MUMBAI, JAN 28, 2013: THE wait is OVER.

We were tracking this case for over four years and while reporting it on 14th October, 2008 commented - "IT is too early to predict the outcome of this case but rest assured, its reverberations would be felt far and wide like the Nano land dispute."

The short issue is that the appellant is a registered manufacturer of Tipper Bodies/dumper falling under Chapter sub heading 8704 10 90 of the CETA'85 on chassis supplied by automobile manufacturers. Incidentally, Chapter note 5 to chapter 87 treats such body builders as manufacturers of motor vehicles by deeming fiction.

Revenue is of the view that the valuation of these "motor vehicles" manufactured on job work on behalf of the principal manufacturer should be in terms of Rule 10A of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 w.e.f 01.04.2007.

So, the value of these "motor vehicles" at the job worker's end for discharge of Central Excise duty is now supposed to be the transaction value at which the principal manufacturer [Tata Motors] sells these goods to be unrelated buyer.

The first demand of Rs.84.82 lakhs was confirmed by the CCE, Belapur on 17.04.2008 and it reached the CESTAT. We had reported the Stay order thus -

Motor vehicle body built on chassis supplied by Tata Motors - Valuation under Rule 10A of the Valuation Rules, 2000 - Applicant offers to deposit Rs 25 lakhs as pre-deposit and Tribunal graciously accepts it. - (2008-TIOL-1676-CESTAT-MUM)

After that it was the turn of the second Order dated 18.02.2010 to reach the CESTAT. We had reported the Stay order as -

Rule 10A of Valuation Rules, 2000 - fabricating bodies on duty paid chassis - whether applicants are liable to pay duty on price at which vehicles are sold by Tata Motors - Pre-deposit ordered of Rs 50 lakhs: CESTAT - (2011-TIOL-1223-CESTAT-MUM)

This order of the CESTAT came in for some criticism by the Bombay High Court. Inasmuch as the High Court while setting aside the order of pre-deposit observed thus - (2012-TIOL-500-HC-MUM-CX)-

"11. We have carefully considered the rival submissions. The basic dispute in the present case, is whether Rule 10A of the Valuation Rules is applicable to the facts of the present case. Rule 10A applies only in cases where the excisable goods are produced or manufactured by a jobworker on behalf of a person who is supplying the raw materials namely principal manufacturer. The Tribunal relying upon the judgment of the Apex Court in the case of Basant Industries V/s. Collector of Central Excise reported in - (2002-TIOL-167-SC-CX) has held that the assessee cannot be said to be carrying on body building activity 'on behalf of' Tata Motors and consequently Rule 10A has no application to the facts of the present case. Once a prima facie finding is recorded by the Tribunal to the effect that the provisions of Rule 10A is not applicable to the facts of the present case, then, there would be no question of depositing the duly payable under Rule 10A of the Valuation Rules. The Tribunal, however, directed pre-deposit by relying upon its order dated 5th August 2008 in the assessee's own case wherein the assessee had voluntarily offered to make pre-deposit.

12. Perusal of the order of CESTAT dated 5th August 2008 clearly shows that the assessee voluntarily offered to make pre-deposit in that case, because, the issue being recurring in nature, the Tribunal would hear and disposed of the matter expeditiously. Thus, the offer made in the earlier appeal was conditional. Admittedly, in spite of making pre-deposit, the matter has not been disposed of till date and that appeal is still pending before the CESTAT. In these circumstances, instead of deciding the earlier appeal filed by the assessee expeditiously, the Tribunal was not justified in directing the assessee to make pre-deposit in the present case by relying upon its earlier order.

13. For the aforesaid reasons, we set aside the impugned order of CESTAT directing deposit of Rs.50,00,000/- and direct the Tribunal to hear the appeal on merits without insisting on pre-deposit.

14. We are informed that several appeals filed by the assessee as also various other body builders raising similar questions are pending before the CESTAT for nearly four years. Since the issue is recurring in nature, we hope that the CESTAT endeavors to resolve the dispute expeditiously and preferably within a period of four months from today.

15. We make it clear that we have not expressed any opinion on the prima facie views expressed by the Tribunal and the Tribunal shall dispose off the appeal on merits without being influenced by this order or the impugned order."

The matter was heard recently and the judgment has been delivered.

The Bench after distinguishing all the decisions cited by the appellant by holding that when the decisions were passed Rule 10A was not in existence and after extracting paragraphs 16 to 21 from the decision in Audi Automobiles - (2009-TIOL-1289-CESTAT-DEL) relied upon by the Revenue representative held thus-

"18. We are, therefore, of the view that the decision of the Audi Automobiles cited supra is squarely applicable to the present case before us and accordingly we hold that the value of the goods supplied by the appellants is to be determined under Rule 10A of the Central Excise Valuation Rules, 2000 and not under Rule 6. We, therefore, do not find any infirmity in the Orders-in-Original with regard to valuation of the goods under Rule 10A of the Valuation Rules. Since the duty is required to be paid under Rule 10A, interest is also required to be paid on the duty quantified by the department. Accordingly, we uphold the Orders-in-Original with regard to confirmation of duty under Rule 10A of the Valuation Rules along with interest. However, Sales tax amount paid by the appellants needs to be deducted from the value.

19. As regards imposition of penalty, we find prior to 1.4.2007, duty was being paid under Rule 6 of the Valuation Rules read with Sec.4(1)(a) of the Central Excise Act and only with effect from 1.4.2007, after insertion of Rule 10A of the Valuation Rules, 2000, the dispute relating to valuation of goods is raised by the Department. Since the valuation of goods is regarding the interpretation of Rule 10A and Rule 6 of the Valuation Rules, we find that there cannot be any case for imposition of any penalty. Accordingly, the penalties imposed are set aside."

The appeals were disposed of accordingly.

In passing: Now for the matter covered in (2008-TIOL-938-CESTAT-MUM) & (2010-TIOL-1410-CESTAT-MUM) - but that's another story!

(See 2013-TIOL-166-CESTAT-MUM)