Amortised Cost Of Moulds And Dies Includible In Assessable Value Under Excise Act: CESTAT Chennai

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 25 March 2026 held that the amortised value of moulds and dies supplied by customers must be included in the assessable value of finished goods under excise law.

A Bench comprising Technical Member Vasa Seshagiri Rao and Judicial Member Ajayan T.V. partly allowed the appeal filed by Best Cast IT Ltd., a manufacturer of aluminium die-cast automotive components.

The Tribunal noted:

"The statutory provisions governing valuation of excisable goods are contained in Section 4 of the Central Excise Act. Under this provision the assessable value of goods is the transaction value when the price is the sole consideration for sale. However, when additional consideration flows directly or indirectly from the buyer to the manufacturer, the value of such additional consideration must also be included in the assessable value."

The case arose from proceedings against Best Cast IT, where the Department alleged short payment of duty on account of non-inclusion of the amortised cost of moulds and dies in the assessable value of castings cleared to customers.

It contended that moulds and dies, whether supplied free of cost by customers or developed by Best Cast IT and retained for production, constituted additional consideration under Section 4 of the Central Excise Act, read with Rule 6 of the Central Excise Valuation Rules, 2000.

The adjudicating authority confirmed a demand of Rs. 4.17 lakh along with interest and penalty for the period May 2010 to March 2015 by invoking the extended period of limitation. This was upheld by the Commissioner (Appeals), prompting an appeal before the Tribunal.

Before the Tribunal, Best Cast IT argued that duty had already been discharged on the moulds and dies at the time of their clearance and that inclusion of their amortised value in the assessable value of castings would amount to double taxation.

The Revenue contended that moulds and dies are essential production tools, and their cost directly contributes to the manufacture of finished goods, forming part of assessable value as additional consideration from the buyer.

The Tribunal observed that moulds and dies supplied by customers represent additional consideration, and their cost must be amortised over production and proportionately added to the value of finished goods.

It referred to Central Board of Excise and Customs Circular No. 170/4/96-CX dated 23 January 1996, which clarifies that the cost of customer-supplied moulds should be amortised over expected production and proportionately included in the assessable value of castings.

The Tribunal further noted:

"The amortised value of dies and moulds supplied by customers and used in the manufacture of aluminium die-castings is includible in the assessable value of the finished goods."

However, the Tribunal found merit in Best Cast IT Ltd.'s contention regarding limitation. It held that all relevant facts were available in statutory records and examined during earlier audits, and there was no suppression or intent to evade duty.

Consequently, it held the invocation of the extended period of limitation unsustainable, and set aside the penalty imposed under Section 11AC.

Accordingly, the CESTAT partly allowed the appeal.

For Appellant: N. Viswanathan, Advocate

For Respondent: Rajini Menon, Authorised Representative