2007 (1) TMI 390 - AT - Central Excise

Summary

Issues:
1. Duty demand and penalties on imported goods using transferred DEPB scrips.
2. Dispute regarding the value of export goods.
3. Use of Cost Accountant for determining the value of export goods.

Analysis:
1. The judgment pertains to stay applications against duty demand and penalties imposed under an order dated 23-10-06, amounting to about Rs. 1.3 crores, related to goods imported using transferred DEPB scrips. The Tribunal found that the DEPB scrip was obtained fraudulently by overvaluing export consignments, with the actual value significantly lower than the declared value of Rs. 165-175 per kg, being only Rs. 5 per kg.

2. The appellant resisted the demand on various grounds, primarily arguing that the export item, forged alloy steel, valued at Rs. 5 per kg by authorities, was unreasonably low compared to market prices. It was contended that the goods were manufactured using imported materials by the exporter or connected manufacturing units. Reference was made to a Supreme Court ruling indicating that the export items were not scrap, contrary to how the authorities treated them. Additionally, a previous market inquiry by Customs authorities had valued a similar consignment at 128-150 per kg.

3. The appellant highlighted having deposited over Rs. 5 crores during investigation proceedings, with a previous appeal resulting in a waiver of deposit for a demand of about Rs. 3.7 crores. It was argued that the remaining amount of Rs. 1.3 crores would sufficiently cover the duty demand in the current order.

4. The crux of the dispute revolved around the value of the export goods, prompting the need for a reliable method to determine the value for adjudication. Section 14(A) of the Central Excise Act allows for the determination of costs by a Cost Accountant approved by the Chief Commissioner, especially crucial in cases involving similar issues. Consequently, the Chief Commissioner of Central Excise, Chandigarh, was directed to appoint a Cost Accountant, in consultation with the appellant, to ascertain the value of the export goods manufactured by the appellant.

5. Pending the valuation report by the Cost Accountant, a stay of recovery was granted considering the deposit already made, and the case was adjourned for further proceedings on 19-3-07. The judgment aimed to address the contentious issues surrounding the duty demand and penalties, emphasizing the importance of accurately determining the value of the export goods through a prescribed method for fair adjudication.