MUTUAL INDUSTRIES LTD Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS case has come up before this Larger Bench pursuant to an order of reference made by a Bench of two Members. According to that Bench there is an apparent conflict between the decisions rendered by two coordinate Benches of this Tribunal in Flex Industries Ltd. v. CCE, Meerut - 1997 (91) E.L.T. 120 and CCE, Aurangabad v. Marathwada Glass Co. Pvt. Ltd. -1999 (85) ECR 94. To resolve the apparent conflict in the above mentioned decisions the matter has come up before us.

(2.) SHORT facts necessary for understanding the issue raised in this appeal are as follows:

(3.) AS stated earlier, appellant entered into contract with the customers for supply of plastic components manufactured by them utilising the moulds supplied free of charge by the customer. Value of the final product was fixed at Rs.160 per set. Cost of mould supplied by the customer was found to be Rs. 21,20,000 maximum number of components which could be manufactured by using the said mould was taken as 2.5 lacs pieces. On this data the value of each component part was found to be Rs. 160 plus total cost of mould divided by maximum capacity. This worked out to be Rs. 8.48 per unit. Thus percentage of cost includible in the value was found to be, namely, Rs. 8.48 divided by Rs.160 multiplied by 100. This worked out at 5.3%. This was rounded up to 6%. On this basis the differential duty demanded was confirmed. The issue is whether this action resorted to by the Department is sustainable.