2007 (2) TMI 376 - AT - Central Excise

Summary

Issues: Duty demand and penalties on processed yarn, incorrect assessment of assessable value, objections on cost revision, interest cost inclusion, over heads addition, limitation period for assessment, intention to evade payment of duty.

Analysis:
1. Assessable Value Assessment: The appellant disputed the demand based on incorrect assessment of assessable value, arguing that the cost revision included duplication of conversion cost and interest cost, which should not have been included. The appellant contended that the provision for conversion made in the original declaration was not deducted during the cost revision, leading to an inflated duty demand. Additionally, the inclusion of interest cost and over heads in the assessable value was challenged, highlighting discrepancies in the calculation method.

2. Limitation Period: Regarding the limitation period for assessment, the appellant argued that since the assessments were originally based on approved values and there was no intentional suppression of facts to evade duty payment, the extended period for assessment should not apply. The appellant emphasized that the fabrics received from different sources were valued similarly, indicating no intent to evade duty payment based on the comparable value of goods.

3. Judgment and Stay Order: The Tribunal acknowledged the merit in the appellant's contentions, particularly concerning the exclusion of interest cost under CAS 4 standards and the failure to adjust conversion costs during the revision. The Tribunal found no evidence of intentional misstatement or suppression of facts to evade duty payment, especially considering the valuation based on comparable goods as per Rule 6 of the Valuation Rules. Consequently, the Tribunal allowed the stay application, halting the recovery process until the appeal was disposed of, indicating a favorable stance towards the appellant's arguments and concerns.

In conclusion, the judgment by the Appellate Tribunal CESTAT, New Delhi addressed various issues related to duty demand, assessable value assessment, limitation period for assessment, and intention to evade payment of duty. The Tribunal found merit in the appellant's objections regarding the incorrect assessment of assessable value, exclusion of certain costs, and lack of intentional evasion, leading to a favorable decision to stay the recovery process pending appeal disposal.