In a recent ruling, the Chandigarh bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) upheld the duty valuation made under Rule 10A and rejected the vehicle manufacturer’s appeal on refund claim.
In this case, the appellant, M/s SML Isuzu Ltd was engaged in the manufacture of light and medium commercial vehicles and luxury buses. It is also important to note that the appellants supplied chassis of motor vehicles to their job workers at Dera Bassi and Rohad, and the job workers returned the vehicles after bodybuilding to the appellants.
The appellants had sold the vehicles through their depots and the appellants filed a refund claim for Rs. 3,24,68,676 because the appellant was required to pay duty under Rule 10A of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.
This claim was not allowed by the adjudicating authority.
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The appellants argued that filing a refund claim by the body-builders does not affect their right to claim a refund. They contended that body-builders are not liable to pay duty under Rule 10A, and the duty paid by job-workers was borne by them. The appellants stated that the transaction with bodybuilders does not constitute a sale, as there was no tripartite agreement or manufacturing on their behalf. They claimed the body-built vehicles are assessable under Section 4(1)(B) of the Central Excise Act, 1944, and Rule 6 of the Valuation Rules, making them eligible for a refund and interest.
The bench, after going through the case, relied on the appellant’s counsel, Audi Automobiles- 2010(249) ELT.124, that the work entrusted to the firms involved body fabrication and mounting on chassis supplied free of cost by the manufacturer. This activity falls under Rule 10A for valuation purposes, not Rule 6.
The CESTAT held that the valuation of the goods in the impugned case is to be made in terms of Rule 10A of CEVR 2000 and upheld the impugned order.
The CESTAT, comprising S.S. Garg ( Judicial Member ) and P. Anjani Kumar ( Technical Member ) rejected the manufacturer’s appeal.
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