2001 (10) TMI 834 - AT - Central Excise

Summary

Issues:
1. Waiver of deposit of duty and penalties by the appellant.
2. Valuation of captively consumed yarn and duty payable on dyeing and sizing of yarn.
3. Contention regarding the extended period of limitation under Section 11A.
4. Inclusion of administrative overheads in determining the cost of manufacture.
5. Determination of assessable value of yarn purchased from the market and subjected to processes.
6. Application of principles to determine profit and cost of manufacture.
7. Awareness of department regarding processes carried out by the applicant.
8. Comparison with similar cases and consideration of facts.

Analysis:
1. The appellant sought waiver of deposit of duty totaling Rs. 1.27 crores and penalties imposed on various individuals. The Commissioner concluded that the value of captively consumed yarn should be based on the cost of manufacture plus profit, not market prices. The duty on dyeing and sizing of yarn was also disputed.

2. The Counsel argued that market invoices proved lower yarn prices, challenging the extended limitation period under Section 11A. The contention included the exclusion of administrative overheads and impermissible profit calculations. The Tribunal found no evidence supporting market price comparisons.

3. The Tribunal upheld the Commissioner's valuation method based on production costs and profit principles from previous decisions. The inclusion of administrative overheads was deemed rational under Rule 6(b)(ii).

4. Regarding the yarn purchased from the market, the appellant's contention on limitation due to departmental awareness of processes was examined. The Tribunal noted fabric could be made from unbleached yarn, requiring a detailed comparison with similar cases.

5. Considering all aspects, the Tribunal directed the appellant to deposit Rs. 50 lakhs within two months, waiving the remaining duty and penalties. Each case's unique facts were emphasized for decision-making.

6. The judgment highlighted the importance of factual analysis and adherence to legal principles in determining duty liabilities and penalties, emphasizing the need for thorough examination of each case's circumstances.