2026-VIL-1538-CESTAT-CHE-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Valuation of excisable goods - Tooling advances received from buyer - Inclusion in assessable value - Application of Rule 6 of Central Excise Valuation Rules, 2000 - Appellant contended that tooling cost required to be amortised over finished goods manufactured with tools and that proportionate cost had already been included in assessable value through supplementary invoices - Adjudicating Authority accepted amortisation method and dropped proceedings. Commissioner (Appeals) relayed on Circular No.170/4/96-CX to mandate Cost Accountant certificate and remanded for fresh determination - Whether entire tooling advance is includible in assessable value or only proportionate amortised tooling cost attributable to finished goods - HELD - Section 4 of Central Excise Act and specifically Rule 6 of Central Excise Valuation Rules, 2000, with its Explanation 1, contemplate that value of tools, dies, moulds used in production must be apportioned as appropriate and not automatically loaded on single clearance. What is required is determination of portion attributable to goods being valued - Circular No.170/4/96-CX proceeds on principle of proportionate valuation and does not mandate Cost Accountant as inflexible requirement. Evidence on record including tooling records with tool descriptions and values, production records, supplementary invoice referring to tool amortisation cost with corresponding assessable value and duty, and Chartered Accountant certificate establishes actual tooling activity and inclusion of amortised cost in assessable value. Department has not identified any specific deficiency in amortisation – Further, extended period invocation cannot be sustained as tooling advances and proposed method of amortisation were specifically brought to Department's notice during audit. Mere failure or negligence in adopting correct valuation does not establish suppression with intent to evade where dispute concerns valuation methodology and facts disclosed to Department. No material establishing deliberate suppression or intent to evade duty warranting penalty under Section 11AC. The Order-in-Original dropping proceedings is restored and the appeal is allowed
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