2004 (7) TMI 514 - AT - Central Excise

Summary

Issues:
Demand of duty on Compound Rubber for a specific period.
Availability of Modvat credit for duty paid on inputs used in the manufacture of Compound Rubber.
Interpretation of Board's Circular regarding determination of assessable value of captively consumed goods.

Analysis:
1. The appeal was against a demand of duty on Compound Rubber for a period when it was not exempt from Basic Excise Duty due to the rescission of a relevant notification. The appellant contended that a subsequent clarificatory notification made the product exempt retrospectively. However, the appellant's counsel conceded the dutiability for the said period based on case law. The appellant also argued for the availability of Modvat credit for duty paid on inputs used in manufacturing Compound Rubber, which was not considered by the authorities. The Tribunal agreed that the Modvat credit claim should be factored into the quantification of the duty demand.

2. The appellant further claimed the benefit of a Circular issued by the CBEC, which prescribed using "profit before tax" instead of "gross profit" for determining the assessable value of captively consumed goods. The appellant argued that the original authority incorrectly used "gross profit" instead of "profit before tax" from the audited balance sheet, resulting in an erroneous quantification of duty. The Tribunal found merit in this contention and directed the original authority to follow the Circular's instructions in determining the assessable value of Compound Rubber.

3. The Tribunal upheld the dutiability of Compound Rubber for the relevant period but set aside the demand of duty due to erroneous quantification. The matter was remanded to the original authority for reevaluation, considering the appellant's claim for Modvat credit and adhering to the Board's Circular for determining the assessable value. The original authority was instructed to provide the appellant with a reasonable opportunity to present their case. As a result, the appeal was partly rejected and partly allowed through remand for proper quantification of duty.