Customs, Excise and Gold Tribunal - Ahmedabad
Bil Industries Ltd. vs Commissioner Of Central Excise And ... on 30 October, 2006
Equivalent citations: 2007(208)ELT348(TRI-AHMD)
ORDER Archana Wadhwa, Member (J)
1. After hearing both sides, we find that the appellant is engaged in the manufacture of tools/dies for M/s Ashok Leyland. These tools/dies are sold by them to M/s Ashok Leyland at a value which includes their margin of profit. However, these tools/dies are not physically handed over to M/s Ashok Leyland but are kept with them for further manufacture of components and parts of motor vehicles for M/s Ashok Leyland. Admittedly, while arriving at the cost of components and parts manufactured by them for M/s Ashok Leyland, amortised cost of tools and dies is being included in the cost of components and parts.
2. Vide their impugned order, the authorities below, have held that since tools and dies became the property of M/s Ashok Leyland and as the same are further being used for manufacture of components and parts, the cost of the same for the purposes of amortization has to be arrived at by including notional margin of profit of M/s Ashok Leyland at the rate of 10%.
3. On the other hand, the appellants' contention is that the cost of tools and dies at the hand of M/s Ashok Leyland, already included the appellants' margin of profit and it is that cost, which is required to be taken into consideration for the purposes of arriving at the cost of parts and components being manufactured by them. For better appreciation, the relevant paragraph of the Commissioner's (Appeals) order is reproduced below:
The submissions made by the appellants have been carefully examined as also the certificate and detailed cost break on the Cost Accountant as also the chart showing as to how the amortised cost has been worked out. From a perusal of the documents it is clear that while effecting the sale of the tools/dies to M/s Ashok Leyland, M/s Bil Metals have included their margin of profit of 10% while arriving at sale value. This is so certified by the Cost Accountant, is reflected in the chart of cost breakup countersigned by the Cost Accountant and this value forms the basis on which the appellant has worked out amortised value to be added to the cost of each components/parts manufactured with the use of such tools/dies. A perusal of the second chart for arriving at amortised value, however, indicates that to the sale value of M/s Bil Metal only the excise duty and CST have been added to arrive at total value. After sale, these tools/dies are used for the manufacture of components and parts which in turn have a value. To this value must be added amortised value of each tool and dies and to arrive at the correct amortised value, apart from the original sale price of tool and die plus excise duty plus CST, there must be added the notional margin of profit of M/s Ashok Leyland to arrive at the correct total value amount which when divided by the tool life would arrive at the correct amortised value. This notional margin of profit of M/s Ashok Leyland has not been added while arriving at the total value amount and hence the amortised value. The margin of profit which the appellant is harping upon is their own margin of profit which has duty been added while arriving at the sale price at which the tools and dies are sold to M/s Ashok Leyland. This is not in dispute : the issue in question is that the notional margin of profit of M/s Ashok Leyland, who are now the owners of tools and dies also ought to have been added in the invoice value of tools/dies, in addition to the excise duty and CST to arrive at correct total value while working out the correct amortised value which has not been done in the present case as is evident from the statement of Tooling Cost Developed for M/s Ashok Leyland submitted by the appellants during personal hearing and marked as 'B' and which enclosed as Annexure to the Order-in-Appeal.
4. Ld.Advocate of the appellants submits that the dispute in the subsequent period in respect of the same, appellant was resolved by the Commissioner (Appeals) in their favour. The said order does not stand appealed against by the Revenue. The relevant portion of the subsequent order dated 29.5.03 is reproduced below :
The second issue pertains to as to whether notional margin of profit of M/s Ashok Leyland was required to be added to arrive at the correct amortised value of tools/dies or otherwise. It is admitted fact that the appellants have manufactured dies/tools for M/s Ashok Leyland and sold to them (Ashok Leyland) and therefore after sale the tools/dies are the property of M/s Ashok Leyland. In my view, notional margin of profit of M/s Ashok Leyland cannot be added, since they have not sold these tools/dies to the appellants. The question of profit arises only when sale is made.
5. We find force in the above reasoning of the Commissioner's (Appeals) order. It is the cost of tools/dies at the hand of M/s Ashok Leyland, which has to be taken into consideration for arriving at the assessable value of the parts and components and no further margin of profit of M/s Ashok Leyland has to be added to the value of such dies/tools. The above view finds support from the Tribunal's order in the case of Gansons Ltd. v. Collector of Central Excise, Nagpur .
6. In view of the foregoing, we set aside the impugned order and allow the appeal with consequential relief to the appellants.
(Dictated in the Open Court.)