PRAYAS CASTINGS LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THE above appeals involve common issue and can be heard together and disposed of by this common order. The issue in these appeals is as to whether pattern development charges and die development charges recovered by the appellants herein who are manufacturers of castings, from their customers by raising special debit note, are to be included in the assessable value of the castings.

(2.) WE have heard both sides. We find that the issue stands settled by the Larger Bench decision in Mutual Industries Ltd. v. Collector of Central Excise, Mumbai wherein it has been held that the proportionate cost of moulds, supplied free by the customers and used in the manufacture of finished goods is includible in the assessable value of finished goods. Although the learned Counsel for the appellants contends that the C.B.E.C. Circular dtd. 23 -1 -1996 setting out that the proportionate cost of pattern has to be included in the assessable value of the casting is unconstitutional and relies upon Hon'ble Madhya Pradesh High Court judgment in Universal Cables Ltd., Satna v. Union of India and Ors. in support of the contention that the method of valuation of excisable goods is laid down in Section 4 of the Act and the Board cannot prescribe different methods of valuation by issuing supplementary instructions, we note that the High Court judgment was delivered in September, 1976 which is much prior to introduction of Section 37B in the Central Excise Act, which was inserted by Section 7 of the Central Excises and Salt (Amendment) Act, 1985 and which provides for issue of orders, instructions and directions to Central Excise Officers for the purpose of uniformity in the classification of excisable goods with respect to levy of duty of excise on such goods. Therefore, reliance placed by learned Counsel on the Hon'ble Madhya Pradesh High Court judgment does not advance the case of the appellants.

(3.) SINCE the issue stands settled by the Larger Bench decision, we dispose of these appeals by holding that the proportionate cost is includible in the assessable value in the light of C.B.E.C. Circular dtd. 23 -1 -1996. As regards the penalty, the arguments raised is that the extended period of limitation is not available to the department and therefore, penalty is not sustainable, however, we note that the appellants did not disclose that they were recovering the pattern development charges and die development charges from their customer and this amounts to suppression with intent to evade payment of duty. Therefore, penalty is imposable upon them. However, having regard to the totality of facts and circumstances of the case, we reduce the penalty in Appeal No. E/3389/02 from Rs. 98,851/ - to Rs. 10,000/ - and the penalty in Appeal No. E/363/02 from Rs. 1,000/ - to Rs. 500/ -.