2003 (10) TMI 445 - AT - Central Excise

Summary

Issues:
1. Waiver of deposit of duty and penalty amounting to Rs. 3.13 crores.
2. Determination of duty for a manufacturer of lifts and parts.
3. Compliance with costing standards and guidance notes.
4. Allegations of conscious evasion of duty and penalty imposition.
5. Interpretation of Board's circular on captively consumed goods.
6. Inclusion of administrative overhead in manufacturing cost.
7. Application for waiver based on financial hardship.

Detailed Analysis:
1. The judgment pertains to an application for waiver of deposit of duty and penalty amounting to Rs. 3.13 crores. The applicant, a manufacturer of lifts and parts, failed to appear or seek adjournment despite earlier postponement due to the Counsel's unavailability. The demands in question were for the period between April 1997 to December 2001, with allegations regarding the determination of manufacturing cost and compliance with costing standards. The Tribunal considered the applicant's contentions and the departmental representative's arguments before issuing a decision.

2. The applicant determined duty based on the cost of manufacture under Rule 6(b)(ii) or Rule 8 of the Valuation Rules, 2001. Allegations were made that administrative overhead and profit margin were not appropriately accounted for, as per the guidance notes from the Institute of Costs and Works Accountants of India (ICWAI). The demand was confirmed, and penalty imposed following adjudication of the notice.

3. The applicant argued that the Board's circular emphasized adherence to costing standard CAS-4 issued by the ICWAI, excluding administrative overhead not related to manufacturing activities from the cost of production. Citing relevant case laws, the applicant contended against intentional duty evasion and the imposition of penalties based on an extended period of limitation.

4. The departmental representative supported the Commissioner's findings, highlighting the exclusion of captively consumed capital goods from the Board's circular of 2003. The representative argued that there was no evidence supporting the inclusion of overhead expenses related to manufacturing activities by the applicant.

5. The Tribunal clarified that the Board's circular of 2003 was not applicable to the goods in question, as they were not capital goods. It was observed that administrative overhead related to manufacturing costs had not been adequately included by the applicant. The Tribunal found discrepancies in the applicant's cost calculations and lack of evidence supporting the inclusion of necessary expenses.

6. Considering the arguments and evidence presented, the Tribunal decided to ask the applicant to deposit Rs. 1.25 crores towards duty and penalty within a month, with a waiver granted for the remaining amount. The decision was based on the lack of satisfactory explanation for the exclusion of administrative overhead in the manufacturing cost calculations and the absence of evidence supporting the applicant's claims.