2005 (9) TMI 365 - AT - Central Excise

Summary

Issues: Alleged undervaluation of goods for duty payment, entitlement to Notification No. 217/86 benefit, captively consumed goods, misdeclaration of product value, Chapter X procedure compliance, appeal rejection

In this case, the appellants were involved in the manufacture of Di Ethyl Amine using denatured Ethyl Alcohol as the principal raw material. Two show cause notices were issued, alleging that the appellants had not paid the correct duty due to undervaluation of the product. The value declared for Central Excise duty purposes was significantly lower than the actual price listed, resulting in a demand for differential duty. The lower appellate authority confirmed the duty demand but reduced the penalty imposed. The appellants claimed entitlement to the benefit of Notification No. 217/86, arguing that the goods in Diethyl Amine were captively consumed. However, it was found that the appellants had actually consumed denatured spirit, which was different from the initially sent product. The appellate tribunal agreed with this finding, emphasizing that the appellants did not captively consume Diethyl Amine as claimed. Despite the appellants' attempt to divert the focus by invoking the notification, the tribunal held that the misdeclaration of the product value and the lack of compliance with Chapter X procedure were the key issues at hand. The tribunal noted that when excisable goods are sent to a factory not under the control of the manufacturer, the receiving factory must have the necessary permissions, which were lacking in this case. The tribunal upheld the lower authority's decision to reject the appeal, stating that the appellants failed to address the charge of undervaluation adequately. Consequently, the appeals were dismissed, and the order was upheld.

In conclusion, the judgment focused on the alleged undervaluation of goods, the applicability of Notification No. 217/86, the distinction between captively consumed goods and denatured spirit, compliance with Chapter X procedures, and the importance of accurate valuation for duty payment purposes. The tribunal emphasized the need for proper documentation and adherence to regulatory procedures in excise matters, ultimately leading to the rejection of the appellants' appeal.