Authority: Supreme Court of India, Civil Appellate Jurisdiction
Order Date: August 13, 2026
Case Overview
- Parties: Audi Automobiles & Ors. (appellants) vs. Commissioner of Central Excise and Service Tax, Indore (respondent).
- Nature of Proceeding: Civil appeal (Nos.10504‑10506 of 2017) challenging the Central Excise Department’s assessment and the applicability of the extended limitation period under the proviso to Section 11A of the Central Excise Act, 1944.
- Background: Audi Automobiles performs body‑building of motor vehicles on a job‑work basis. The chassis is supplied by the manufacturer, cleared at 110 % of its cost of manufacture (Rule 8, Central Excise Valuation Rules, 2000). After body‑building, the completed vehicle is returned, and excise duty is computed on the sum of chassis cost, raw materials, job‑work charges, and profit, with CENVAT credit for duty paid on the chassis. The dispute centered on whether the additional 10 % profit margin embedded in the chassis valuation must be included in the assessable value of the completed vehicle.
- Legal References Cited: Ujagar Prints II & III, Empire Industries, Eicher Motors Ltd. v. CCE, Pawan Biscuits Co. Pvt. Ltd. v. CCE, General Engineering Works v. CCE, Larsen & Toubro Ltd. v. CCE, Continental Foundation Joint Venture Holding v. CCE, CCE v. Kolety Gum Industries.
- Key Observations:
- The Supreme Court linked the issue directly to valuation of goods, rejecting the preliminary objection that it fell outside Section 35L.
- It affirmed that the 10 % profit component, part of the statutory chassis value, must be included in the assessable value of the completed vehicle.
- The Court distinguished earlier Tribunal decisions, emphasizing that the Constitution Bench clarification in Ujagar Prints mandates inclusion of the 10 % profit when computing duty on the deemed sale.
- Regarding the proviso to Section 11A, the Court held that the extended limitation period can be invoked only when the omission is wilful and intended to evade duty; mere knowledge of the facts by both parties does not satisfy this requirement.
Final Outcome
- The Supreme Court set aside the Central Excise Tribunal’s order and the appellate authority’s affirmation.
- It held that the assessee’s liability to include the entire cost price (including the 10 % profit) is unassailable, but the demand for the period 01‑11‑2004 to 31‑03‑2007 cannot be levied because the Show Cause Notice dated 30‑04‑2008 was issued beyond the one‑year limitation prescribed in Section 11A(1).
- The appeals were allowed, and any pending applications were disposed of.
Topics: Excise Valuation, Limitation Period