Per Shri V.P. Gulati :

The issue in these appeals relates to the demand of duty in respect of the consideration which is attributable to the moulds and dies supplied by the customer free of cost. The learned lower authority has demanded duty on one-time basis taking into consideration the value of the moulds and dies, depreciation to be allowed and the interest that would accrue in respect of the same.

2. The learned Advocate for the appellants has pleaded that the issue stands covered by the ratio of the decision of the Tribunal in the case of CCE, Madras Vs. M/s. Shardlow India Ltd., reported in 1997 (70) ECR 545. Under similar circumstances, he has pleaded that the Tribunal has directed that the cost of the moulds and dies should be amortised over the life of the moulds and dies used for the production of the goods. He has pleaded that before the learned lower authority they had cited this decision but the learned lower authority had chosen to ignore the ratio of this decision and has adopted a method which is not in accordance with law. He has prayed for following the ratio of the above decision for the purpose of demand of duty.

3. The learned Departmental Representative has pleaded that the ratio of the decision no doubt is on similar facts, but the learned lower authority's order also cannot be found fault with as he has adopted an alternative method which is reasonable.

4. We have considered the pleas made by both the sides. We observe prima facie the issue stands covered by the ratio of the decision cited supra. In that view of the matter on prima facie grounds allow waiver of pre-deposit as prayed for. In as much as the issue is covered by the ratio of the decision cited above, we take up the appeal itself with the consent of both the sides.

5. We observe that in the industry in quite a large number of cases where a customer wants goods of particular specifications, they supply moulds and dies to ensure the quality of the goods, free of cost. In case these had not been supplied, the manufacturer would have had to manufacture these and the cost of there could have been reckoned towards the value of the goods manufactured. The free supply of the moulds and dies, therefore, is an additional consideration for reason of which a lower price would have been charged. This consideration has to be quantified. The Tribunal in the case of Shardlow India Ltd., in para 5 has held as under:

5. We have considered the submissions made by both the sides. We observe that the admitted position is that the expenses incurred towards preparation of the master dies are relatable to the goods which are manufactured by use of the same. The question posed is only as to how duty attributable to the cost of the same has to be collected, i.e. whether the same is to be collected as a one time levy notwithstanding the quantum of production of forgings manufactured by the assessee by use of these or it should be spread over the number of forgings which may be cleared ultimately by use of the master die till it becomes unusable. We observe that it will not be correct in law and also equitable to collect duty in respect of expenses incurred on the master die as one time levy. Development of the die is the first step towards manufacture of the forgings and each die has certain life span and can yield certain number of goods by use of the same either directly or through generation of subsidiary dies by use of the master die. It may so happen that after clearance of few pieces, the goods may not be found to conform to the standard or the customers may discontinue in purchase of the goods manufactured with the help of such dies. In that case the cost of the die would have been recovered in respect of goods which may have been cleared. In terms of Section 4, the value of the goods has to be such that it passes the test of the parameters as set out under Section 4. The law does not provide for loading of the cost of the entire cost incurred towards a particu