2003 (7) TMI 372 - AT - Central Excise

Summary

Issues:
1. Duty demand on fabrication of "bottom side wall sheets" for Railway Coach Factory.
2. Resistance of duty demand on the ground of limitation.
3. Misdeclaration of assessable value and free supply raw materials.

Analysis:
1. The appellant, an engineering unit, appealed against a duty demand of over Rs. 24 lakhs for fabricating "bottom side wall sheets" for Railway Coach Factory. The appellant argued that the demand was beyond the limitation period as the Revenue authorities were aware of the fabrication activities and method of valuation. They contended that they only paid duty on fabrication charges as the raw materials were supplied free by the Railway Coach Factory, which was evident from the contracts and invoices produced in 1992 during an investigation. The appellant maintained that there was no intent to evade duty, and any payable duty could have been passed on to the Railway Coach Factory if timely demanded.

2. The Revenue authorities invoked the extended period under Section 11A, alleging that the appellant suppressed material facts by not disclosing the receipt of free raw materials in their invoices and declaration under Rule 173C. The authorities claimed that the appellant misstated the assessable value and made a misdeclaration regarding the use of free raw materials. However, the appellant argued that the Rule 173C declaration was filed annually and was not relevant to the specific issue in dispute. They clarified that the declaration in question was related to marketing patterns and had no impact on the actual fabrication work undertaken for the Railway Coach Factory.

3. The Tribunal noted that details of the fabrication work and the supply of raw materials by the Railway Coach Factory were known to the Revenue authorities since 1992. The contracts and invoices clearly indicated the provision of raw materials against a bank guarantee, and the low fabrication charges should have alerted the authorities to the separate valuation of raw materials. The Tribunal concluded that there was no suppression of facts by the appellant, and the demand made beyond the limitation period was not justified. Therefore, the appeal was allowed, and the impugned order was set aside in favor of the appellant.