2003 (2) TMI 256 - AT - Central Excise

Summary

Issues: Duty demand on PTFE coatings manufactured by the appellant during 1994-95.

Analysis:
1. The duty demand in this case pertains to Poly Tetra Fluoro Ethylene Coatings (PTFE) manufactured by the appellant during the financial year 1994-95. The tribunal had previously remanded the matter for fresh consideration due to various discrepancies in the valuation process. The department had fixed labor charges at 15%, but no evidence was provided to support this figure. The appellant had sold PTFE coatings to independent buyers, and invoices should have been examined to ascertain the value. The appellant claimed the value of PTFE coating to be 7-8%, but the revenue did not provide comparative proof. The tribunal found that the matter required detailed examination for quantifying the duty demand, leading to a remand order.

2. The appellants raised a grievance that the remand order did not follow the tribunal's directions and again fixed the value and turnover of PTFE based on Schedule 7 of their balance sheet. They argued that this resulted in an overestimation of the value of PTFE produced. The appellant's balance sheet included trading activity in finished leather, while excise proceedings should have focused only on PTFE. The total quantity of PTFE produced by the appellant was 3084 Kgs, with part sold and the rest used for coating utensils. The appellant's sale price of PTFE was below Rs. 1000 per Kg, supported by contemporary invoices. The revenue authorities were urged to value the total production at the sale price, consider small-scale exemptions, and determine if any duty was payable.

3. Upon reviewing the records and hearing both sides, the tribunal found the computation of the value of PTFE in the impugned order to be erroneous. The balance sheet included trading values in other goods not relevant to duty liability on PTFE. The appellant's sale prices to independent buyers reflected the normal price of the goods. The valuation of the appellant's annual production of PTFE should have been based on unit sale prices, as per Section 4 of the Central Excise Act and Rule 6 of Valuation Rules. Proper valuation showed the production was within the exempted limit of Rs. 30 Lakhs. The adjudication order was deemed erroneous, and the appellant was not liable for duty evasion, penalties, or other consequences. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellants.