2003 (1) TMI 470 - AT - Central Excise

Demand - Duty liability - Valuation - Cenvat/Modvat - Claim for credit of excise duty to SSI unit - Penalty - Quantum of

Summary

Issues:
1. Duty liability of appellants for trolleys manufactured by job workers.
2. Valuation for wholesale and retail prices.
3. Deduction in excise duty.
4. Modvat credit claim.
5. Inclusion of price of new tyres in the value of trolleys.
6. Application of Sections 11AC and 11AB.

Analysis:
1. The first issue pertains to the duty liability of the appellants for trolleys manufactured by job workers. The appellants argued that since the job worker is the manufacturer, no duty should be demanded from them. The tribunal found that the duty liability rests with the manufacturer, who is the job worker in this case. It was noted that the show cause notice had been issued to the job worker for the same goods, leading to adjudication orders against the job worker. Therefore, the tribunal held that duty for the trolleys cannot be demanded from the appellants.

2. The second issue concerns the valuation of goods based on wholesale and retail prices. The appellants contended that only the wholesale price should be considered for valuation under Section 4, not the retail price. The tribunal agreed with the appellants on this point, stating that only the wholesale price should be taken into account for valuation purposes.

3. The third issue involves the deduction in excise duty. The tribunal noted that such a benefit can only be claimed when there is excess value over and above the exemption available as an SSI unit. The tribunal found this stand to be justified.

4. The fourth issue relates to the claim for Modvat credit. The appellants argued for Modvat credit, which was not considered by the Commissioner. The tribunal held that the appellants would be entitled to Modvat credit when there is excess value after the SSI benefit for a particular year.

5. The fifth issue raised by the appellants concerns the inclusion of the price of new tyres in the value of trolleys. The appellants argued that new tyres are provided separately when required by customers and should not be included in the assessable value of the trolleys. The tribunal directed the adjudicating authority to examine the factual position and determine if the price of new tyres should be part of the assessable value.

6. The sixth issue involves the application of Sections 11AC and 11AB. The tribunal agreed with the appellants that since these provisions were not in force during the relevant period, no penalty could be imposed under Section 11AC and no interest could be demanded under Section 11AB. However, the tribunal noted that a penalty under Rule 173Q would be justified, but the quantum would need to be decided afresh by the adjudicating authority.

In conclusion, the tribunal set aside the impugned orders and remanded the matter to the adjudicating authority for re-computing the duty liability and fixing the penalty in accordance with the observations made in the order.