2003 (1) TMI 621 - AT - Central Excise

Issues involved:
1. Valuation of goods for Central Excise duty on stock transfer basis.
2. Allegations of under-invoicing and evasion of Central Excise duty.
3. Application of Indian Institute of Chartered Accountancy guidelines for cost determination.
4. Re-determination of duty and penalty.

Issue 1: Valuation of goods for Central Excise duty on stock transfer basis
In Appeal No. E/61/2001, the appellant, a PSU, challenged an order confirming a demand for differential duty and imposing a penalty based on the alleged erroneous declaration of assessable value for stock transfer items. The Central Excise Department contended that the appellant used stock transfer cost instead of price, leading to under-invoicing. However, the Tribunal noted that the appellant had filed price declarations for duty payment, and previous challenges to these declarations had been dropped after scrutiny by the Assistant Commissioner. The Tribunal found that the methodology adopted by the appellant for duty payment was acceptable, as evidenced by the Assistant Commissioner's orders. The Commissioner's observation of misrepresentation by the appellant was deemed unsustainable, as all relevant information had been provided earlier for valuation purposes. The Tribunal set aside the order and remanded it for reworking the demand and penalty within a six-month period.

Issue 2: Allegations of under-invoicing and evasion of Central Excise duty
In the same Appeal No. E/61/2001, the Central Excise Department alleged that the appellant had under-invoiced goods transferred to sister units, leading to evasion of duty. The Department claimed that overhead costs were not fully included in the declared value, resulting in suppression of the true value of goods. However, the Tribunal found that the Department had access to all relevant details since 1995-96, and the appellant had provided necessary cost breakup information. The Commissioner's assertion of misrepresentation by the appellant was rejected, as the Department had been informed of the cost details earlier. The Tribunal upheld the valuation methodology adopted by the appellant and directed the Commissioner to rework the duty and penalty amounts.

Issue 3: Application of Indian Institute of Chartered Accountancy guidelines for cost determination
Regarding the plea to apply Indian Institute of Chartered Accountancy guidelines for determining conversion costs, the Tribunal did not uphold this argument. The Tribunal emphasized that the cost of manufacture under Rule 6(b)(ii) includes all costs incurred by a manufacturer until the goods' removal, as established in previous judgments. The Commissioner's rejection of the Chartered Accountancy guidelines was supported by the Tribunal. While finding no merit in the Commissioner's findings on limitation and the larger period, the Tribunal restricted the demands to within a six-month period from the notice issue date. The duty quantum was to be re-determined based on this decision.

Issue 4: Re-determination of duty and penalty
In Appeal No. E/235/2001, the appellant challenged an order demanding differential duty and imposing a penalty for alleged evasion of Central Excise duty. The Tribunal upheld the valuation methodology applied in a previous appeal by the same appellant. The appellant's argument that excisable goods were not removed without duty payment was dismissed, and the duty demands were to be reworked based on the approved valuation formula. The Tribunal set aside the duty determination and penalty order, remitting the matter to the Commissioner for re-determination of duty and penalty in the interest of justice.

The Tribunal's judgment focused on the correct valuation of goods for Central Excise duty, addressing allegations of under-invoicing and evasion, the application of cost determination guidelines, and the re-determination of duty and penalty amounts. The Tribunal emphasized the importance of providing complete information for valuation purposes and upheld the methodology adopted by the appellant in previous instances. The orders were set aside for reworking the demands and penalties within a specified period, ensuring a fair and just resolution of the disputes.

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