EICHER TRACTORS Vs. COMMISSIONER OF CENTRAL EXCISE,

JUDGEMENT

(1.) THE appellants who have moved these applications for stay of operation of Order -in -Appeal No. 103 -106/KDT/CE/JPR -I/(54 -57)/2001 dated 8.3.2001 are engaged in the manufacture if agricultural tractors. They produced IC Engines and its parts in their factory in Alwar. IC Engines so manufactured in Alwar are transferred to their unit in Faridabad where those IC Engines are fitted in the finished products namely agricultural tractors. Assessments were made provisionally on the IC Engines manufactured in their unit in Alwar. Subsequently, those provisional assessments were finalised. Thereafter show Cause Notices have been issued demanding duty of Rs.26,94,154/ - in Appeal No.E/884/01 -A and Rs. 42,29,147/ - in Appela No.E/885/01 -A as having been short levied on the ground that the profit earned by the manufacturers on the sale of agricultural tractors should have been added to the value of the IC Engines, captively consumed by them. On receipt of the SCN, the appellants opposed that action on the ground that value of IC Engines which were captively consumed in the manufacture of agricultural tractors cannot be loaded with the profit earned by the firm on the sale of the finished products, namely, agricultural tractors. This objection was overruled by the adjudicating authority and by Order -in -Original No.88/2000 dt.31.7.2000 he confirmed the demand made in the SCN. That authority did not impose andy penalty under the Act or the Rules. Aggrieved by that order, the assessee went in appeal. By a consolidated order, Appeals were dismissed and hence these appeals before the Tribunal.

(2.) WE heard the ld. Consultant representing the appellant and the ld.Departmental Representative. According to the ld. Departmental Representative the IC Engines, fitted with the agricultural tractors, are not sold as such. They were captively consumed by the manufacturers. The profit earned on these IC Engines should be added to its value for the purpose of levying duty under the Central Excise Act. Those IC Engines are not sold but are captively consumed. So the profit earned can only be the profit earned by the manufacturer on the sale of finished goods, namely, agricultural tractors. The authorities below have resorted to this course and according to the ld. Departmental Representative that course is perfectly legal in terms of provisions contained in the Rule 6b(ii) of the Central Excise Valuation Rules.

(3.) IN these appeals before us, they duty sought to be imposed is on the IC Engines. These IC Engines are not sold by the manufacturer as such. They are captively consumed in the production of finished products, namely, agricultural tractors. The profit earned by the manufacturer on the sale of the finished products cannot be added to the value of the IC Engines for the purpose of imposing duty on such IC Engines. This position is settled by the Larger Bench's decision of this Tribunal in Raymonds Limited vs. Commissioner of Central Excise, Aurangabad -2001 (129) ELT 327. The principle stated by the Larger Bench has not been followed by the Excise authorities in passing the orders impugned in these appeals. Therefore, we waive redeposit as contemplated under Section 35F for entertaining these appeals. The respondents are directed not to take any coercive action for recovering any amount of duty ordered in the orders impugned in these appeals until further orders.