Mahindra & Mahindra Ltd. Vs Commissioner of Central Excise (CESTAT Mumbai)
The appellants, manufacturers of prototype commercial vehicles, cleared prototype trucks to their own manufacturing units for testing after paying central excise duty by determining value under Section 4(1)(b) of the Central Excise Act, 1944 read with Rule 4 of the Central Excise Valuation Rules, 2000. The Department contended that the clearances were to the appellants’ own units for commercial purposes and, therefore, valuation should be made under Rule 8 at 110% of the cost of production. Although the adjudicating authority dropped the show cause notices, the Commissioner (Appeals) allowed the Revenue’s appeals and confirmed the demands. The appellants challenged that order before the Tribunal.
The Tribunal observed that an identical issue in the appellants’ own case had already been decided by a Coordinate Bench. In that decision, it was held that Rule 8 applies only where goods are consumed by the manufacturer or on its behalf in the manufacture of another article. Prototype vehicles cleared for testing were not consumed in the manufacture of motor vehicles but were subjected to testing under Rule 126 of the Central Motor Vehicle Rules, 1989 before commercial manufacture. Accordingly, Rule 8 was held to be inapplicable.
