2004 (1) TMI 524 - AT - Central Excise

Summary

Issues:
1. Application for stay of the order of Commissioner (Appeals) due to a dispute over the correct valuation of products for Central Excise duty purposes.
2. Commissioner (Appeals) directing a special audit for the period December 1988 to March 1991 to determine the assessable value of intermediate products for duty exemption.

Analysis:
The case involves an application for stay of the order of Commissioner (Appeals) regarding the valuation of organic surface active agents and slurry for Central Excise duty purposes. The appellants, manufacturers falling under Chapter Heading 34 of CETA, determined the value of their products using the cost construction method and paid duty accordingly. The Deputy Commissioner accepted this valuation, leading to no duty confirmation or demand. However, the Department appealed to the Commissioner (Appeals) who directed a special audit by the Assistant Director (Cost) to determine the assessable value of intermediate products consumed in the production of final duty-exempt products.

The applicants for stay raised concerns about the feasibility of the audit ordered by the Commissioner (Appeals), citing the closure and sale of the factory in 1991 and the advanced age of the only person familiar with the unit's affairs during the relevant period (1988-1991). The Tribunal, after hearing both sides, found the Commissioner (Appeals)'s direction to be unexpected and not directly related to the dispute at hand. The Tribunal noted that the appeal did not question the involvement of a cost auditor in determining costs, making the Commissioner (Appeals)'s order seem sudden and arbitrary. Consequently, the Tribunal allowed the application for stay of the operation of the Commissioner (Appeals)'s order.

In conclusion, the Tribunal's decision to grant a stay of the Commissioner (Appeals)'s order was based on the lack of relevance and practicality of the special audit directive in the ongoing dispute over product valuation for Central Excise duty. The Tribunal highlighted the unexpected nature of the Commissioner (Appeals)'s order and its divergence from the core issue at hand, leading to the decision in favor of granting the stay application.