2004 (3) TMI 577 - AT - Central Excise

Summary

Issues:
1. Whether the appellant suppressed material particulars while declaring the assessable value of captively consumed yarn.
2. Whether the elements of cost alleged to be not included in computing the assessable value of captively consumed yarn should be included.

Analysis:

Issue 1: Suppression of Material Particulars
The Commissioner held that the appellant did not include certain elements of cost in computing the assessable value of captively consumed goods, leading to short recovery of duty. The Commissioner invoked a larger period of limitation, alleging that the appellant deliberately suppressed facts to evade duty. The appellant argued that they followed the correct basis of determining the assessable value, including raw material cost, manufacturing cost, and notional profit. They contended that the department should have clarified any additional elements of cost to be included at the time of filing declarations. The Tribunal held that the show cause notices issued in 1999 for alleged short levy during 1994-1996 were time-barred, as the department was aware of the basis on which the declarations were filed and failed to raise objections earlier.

Issue 2: Inclusion of Elements of Cost
Regarding the inclusion of elements of cost like administrative overheads, selling expenses, profit, and interest in computing the cost of captively consumed yarn, the Commissioner relied on a circular stating that all such elements should be included. The appellant argued that marketing and distribution expenses should not be included as there is no sale of captively consumed yarn. The Tribunal observed that if the department believed these elements should be included, they should have raised the issue within the normal limitation period. The Tribunal disagreed with the Commissioner's interpretation of the circular and held that the demand based on these elements was time-barred.

In conclusion, the Tribunal set aside the Commissioner's order, ruling in favor of the appellant on the grounds of limitation. Consequently, the demands for duty and penalties imposed were also set aside.