2002 (5) TMI 563 - AT - Central Excise

Summary

Issues:
Allegation of collecting part of the price in cash outside invoice price, Method of valuation for short levy of duty, Error in holding additional cash realization throughout the demand period, Challenge to demand for interest and penalty imposition.

Allegation of collecting part of the price in cash outside invoice price:
The appeal was against an Order-in-Original alleging that the appellant received part of the price of Liquid Chlorine in cash, outside the invoice price and books of accounts. Evidence showed cash collections outside company records, confirmed by buyers and company officers. The impugned order upheld the allegation of central excise duty evasion due to under-declaration of assessable value.

Method of valuation for short levy of duty:
The main grievance raised was about the method of valuation adopted. Appellants argued for a different comparison for assessable value determination. They contended that the assessable value should include the cash collection as additional consideration. The method adopted by the adjudicating authority was challenged for not considering the actual cash collection and for using a simple average for valuation.

Error in holding additional cash realization throughout the demand period:
Appellants disputed the finding of continuous additional cash realization throughout the demand period, claiming it was only during peak seasons due to stock disposal constraints. They argued that the lower sale prices were not solely due to cash collection but also due to the need to sell excess stock during peak production periods.

Challenge to demand for interest and penalty imposition:
Appellants challenged the demand for interest under Section 11AB and penalty under Section 11AC, claiming these provisions were not applicable during the relevant period. The imposition of penalty was contested, arguing that the penalty was proposed correctly, but the demand for interest lacked legal sanction.

Judgment Summary:
The tribunal found the evidence of cash collection outside the books of accounts to be established, leading to central excise duty evasion. The method of valuation for short levy was deemed legal, but the tribunal recommended re-computation based on the assessable value of a different manufacturer. The penalty imposition was upheld, considering the deliberate nature of the fraud. The demand for interest was set aside as it lacked legal sanction. The appeal was partially allowed, directing re-computation of short levy based on a specific manufacturer's assessable value, penalty payment, and setting aside the demand for interest.