2003 (1) TMI 567 - AT - Central Excise

Summary

Issues: Valuation of intermediary product (soap noodles), Allegations of misdeclaration and intention to evade payment of duty, Invoking larger period of limitation, Correctness of show cause notices, Application of costing methods, Invocation of extended period, Admissibility of documentary evidence, Prima facie case for waiver of duty and penalty

The judgment involves a dispute regarding the valuation of an intermediary product, soap noodles, which were cleared by the applicants to job workers for the manufacture of finished soaps. The applicants claimed that they had borne the duty on both the noodles and the finished products. The Department alleged that the applicants did not value the soap noodles correctly during a specific period and issued show cause notices for misdeclaration and intention to evade payment of duty. The notices lacked specific quantification of the alleged discrepancies, with the third notice invoking a larger period of limitation. The applicants contended that the Department could not raise new allegations in subsequent notices beyond the scope of the initial notices. They also highlighted a letter from the Superintendent of Central Excise regarding the valuation of the soap noodles, emphasizing the consistency in the valuation over the years.

The applicants argued that the Department's claim was not sustainable as the notices did not provide a proper basis for the alleged discrepancies and the subsequent adjudication order went beyond the scope of the notices. They referred to relevant case laws to support their position. The Department, on the other hand, relied on a decision to assert the invocability of the extended period due to alleged suppression of correct values. They emphasized the importance of correct valuation to ensure revenue neutrality and disputed the admissibility of certain documents presented by the applicants during the appeal that were not submitted to lower authorities.

After considering the arguments and case laws presented by both parties, the Tribunal found the issue to be complex and requiring detailed examination of facts, evidence, and case laws. While the applicants did not establish a strong prima facie case for a total waiver of duty and penalty, the Tribunal directed them to deposit a specified amount by a certain date, with the balance to be deposited later. The matter was scheduled for further review to assess compliance with the directive.