2006 (3) TMI 608 - AT - Central Excise

Summary

Issues:
1. Undervaluation of product by Unit III leading to differential duty payment.
2. Revision of input cost and assessable value by Unit I.
3. Dispute over suppression of raw material cost by Unit I.

Analysis:
1. The case involves M/s. Lakshmi Card Clothing Manufacturing Company Private Limited, engaged in manufacturing textile machinery parts and steel wires. Unit I received round steel wires from Unit III, which were used to manufacture profile wires. Unit III paid additional duty due to undervaluation detected by the audit party. Unit I, upon learning of this, revised their valuation and paid the differential duty on the same day as Unit III. The issue of suppression of raw material cost arose, but it was found that any suppression was in Unit III, not Unit I. The Tribunal noted that no case of suppression was framed against Unit III, raising doubts about the basis of the respondent's case against Unit I.

2. The Tribunal reviewed the records, including a report from the Joint Commissioner of Central Excise and a letter from the appellant company. It was confirmed that both Unit III and Unit I paid the differential duty on the same date. Unit I revised their valuation promptly upon learning of Unit III's additional duty payment. The Tribunal found that Unit I did not suppress any information and acted promptly to rectify the valuation, leading to the conclusion that their application for a certificate under Rule 57 E should have been allowed.

3. Consequently, the impugned order was set aside, and the order of the Assistant Commissioner was restored. The Tribunal directed the issuance of the requisite certificate to the appellants, thereby allowing the appeal in favor of Unit I. The judgment highlighted the prompt action taken by Unit I upon discovering the discrepancy, ultimately absolving them of any wrongdoing regarding the valuation of the final product.