2004 (5) TMI 452 - AT - Central Excise

Summary

Issues:
1. Central Excise duty confirmation and penalty imposition against the appellant for under-declaration of value of M.S. Pipes.
2. Appellant's argument regarding not adding a profit margin due to being a State Government entity.
3. Applicability of the larger period of limitation for duty demand.
4. Sustainability of the duty demand based on the inclusion of various charges in the assessable value.
5. Decision on penalty imposition considering the appellant's involvement in public service.

Analysis:
1. The appeal was filed against the order confirming Central Excise duty of Rs. 68,68,868/- with a penalty of equivalent amount due to under-declaration of the value of M.S. Pipes manufactured for captive consumption. The pipes were made by independent contractors using steel plates supplied by the appellant. The cost audit revealed the under-declaration, leading to the duty demand.

2. The Commissioner considered the appellant, a State Government undertaking, stepping into the shoes of manufacturers by registering for Central Excise duty and clearing pipes from contractors' premises. The audit reports highlighted expenses like testing charges, conversion charges, and administrative expenses to be added to the assessable value. The appellant argued against adding a profit margin, citing consistent losses of a different State Government body, which was clarified to be a separate entity.

3. The Tribunal noted the duty payment by the appellant for pipes fabricated by job workers and the necessity of declaring all manufacturing-related expenses. Failure to disclose these expenses was considered as misstatement/suppression, akin to evasion for a non-Government entity. The Commissioner's decision on the larger limitation period for duty demand was upheld.

4. The Tribunal found the duty demand sustainable as the appellant failed to challenge the inclusion of charges in the assessable value. Despite upholding the demand, the penalty was set aside due to the appellant's engagement in public service, showing leniency based on the nature of their activities.

5. In conclusion, the Tribunal rejected the appeal, affirming the duty demand but waiving the penalty, considering the appellant's role in public service.