Supreme Court of India· 13 August 2026
Under Rule 8 of the Central Excise Valuation Rules, 2000, where a chassis is valued at 110% of its cost of manufacture and then sent for body-building on job-work, must the job-worker's assessable value of the completed vehicle also include that additional 10%?
Audi Automobiles & Ors v. Commissioner of Central Excise and Service Tax, Indore
2026 INSC 858 · Civil Appeal Nos.10504-10506 of 2017
Coram: J. B. Pardiwala; K. Vinod Chandran
Answer
Yes. The 10% additional cost forms part of the value of the intermediate product, the chassis, under Rule 8, and cannot be excluded when the job-worker computes the assessable value of the completed, body-built vehicle.
Headnote
Central Excise Act, 1944 — s.11A, proviso, s.11A(1), s.35L — Central Excise Valuation Rules, 2000 — r.8 — Job-work valuation — Extended period of limitation — Suppression — Wilful —
Central Excise Valuation Rules, 2000 — r.8 — Job-work — 10% manufacturing cost includible —
Held: The 10% additional cost built into the chassis's assessable value under Rule 8 forms part of the intermediate product's value and must also be included when the job-worker computes duty on the completed vehicle. The assessee's liability to include it is unassailable. (¶11, 12, 17)
Central Excise Act, 1944 — s.11A proviso — Extended limitation — Suppression must be wilful —
Held further: Suppression to invoke the extended period under the proviso to Section 11A must be wilful and made with intent to evade duty. When the facts are known to both parties, omission by one party to do what he might have done would not render its suppression. (¶15, 16)
Central Excise Act, 1944 — s.11A(1) — Limitation — Demand time-barred —
Held further: The Department already knew the manufacturer's chassis cleared at 110% of its cost of manufacture, so the extended period could not be invoked, and the show cause notice issued beyond the one-year period under Section 11A(1) was time-barred. The Tribunal's order was set aside and the appeals allowed. (¶16, 17, 18)
In the Court's own words
Paragraph 7We are not convinced that the matter was settled by the larger bench of the CESTAT, since it followed M/s Ujagar Prints and Others (II)[^3] & M/s Ujagar Prints and Others (III)[^4], wherein a Constitution Bench answered a reference from Empire Industries v. Union of India[^6]. The Tribunal held so in paragraph 10 and 11 as under: -
Paragraph 11The facts in both the cited decisions are quite distinct and not comparable to the present case, where the chassis manufactured is cleared on the assessable value of the chassis, being 110% of the cost of manufacture, in which event the 10% value definitely has to be included, when the job worker supplies the completed motor vehicle, with ‘body built’ to the manufacturer, along with the value of the raw materials and expenses incurred by the job worker and profits generated in the job work. What was not includable, even as per M/s Ujagar Prints and Others (II)[^3] & M/s Ujagar Prints and Others (III)[^4] was the anticipated profit in sale of the completed motor vehicle by the manufacturer and the expenses incurred by the manufacturer after receipt of the competed vehicle from the job worker.
Paragraph 12Hence, it is based on M/s Ujagar Prints and Others (III)[^4] that the finding was rendered. The assessee was liable to include 10% included in the valuation under Rule 8, on which the manufacturer pays duty at the time of supply to the job worker. When the job worker computes excise duty on the deemed sale, at its gate, that 10% has to be included since it has gone into the cost of the vehicle on which excise duty is already paid and credit utilised. Hence, we are not inclined to find that the matter was in a flux, since the Constitution Bench decision applied squarely. The Larger Bench of the CESTAT, meeting the submissions of the assessee regarding the various Tribunal decisions cited in their support, observed that it does not cut any ice; rightly so.
Acts & Sections
Central Excise Act, 1944 — s.11ACentral Excise Act, 1944 — s.11A provisoCentral Excise Act, 1944 — s.11A(1)Central Excise Act, 1944 — s.35LCentral Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 — r.8One judgment a day. That's the whole habit.
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