2007 (4) TMI 547 - AT - Central Excise

Summary

Issues:
1. Valuation of sub-assemblies for duty liability determination.
2. Compliance with Circular dated 13-2-2003 and CAS4 guidelines.
3. Applicability of Apex Court decision in Cadbury India Ltd. case.

Analysis:

Issue 1: Valuation of sub-assemblies for duty liability determination
The case involved the appellant company manufacturing and selling PCB sub-assemblies to co-manufacturers for the production of finished goods. The Department alleged that the appellant was undervaluing the sub-assemblies, leading to a lower duty payment on the finished products. Show Cause Notices were issued for recovery of duty, interest, and penalties based on cost audit reports. The Commissioner confirmed the duty demand, leading to appeals and remands.

Issue 2: Compliance with Circular dated 13-2-2003 and CAS4 guidelines
The Tribunal found that the Commissioner did not follow the remand direction to consider the Circular dated 13-2-2003, which required valuation of production costs in accordance with CAS4. The Tribunal noted that the appellant had previously raised the plea for valuation under CAS4. Referring to the Teja Engineering Services Pvt. Ltd. case, the Tribunal emphasized that CAS4 was applicable to all pending matters. The Commissioner's failure to consider CAS4 led to the decision to remand the case for fresh determination.

Issue 3: Applicability of Apex Court decision in Cadbury India Ltd. case
The appellant argued that the Apex Court decision in Cadbury India Ltd. case was relevant, stating that certain costs should not be included in the assessable value of captively consumed intermediate products. However, the Tribunal determined that in this case, the valuation should be done as per the Circular from February 2003, which was not followed by the Commissioner. Additionally, the Cadbury India Ltd. decision was not available to the Commissioner during the initial order. Therefore, the Tribunal decided to remit the case to the Commissioner for a fresh decision considering the Circular and the Apex Court decision.

In conclusion, the impugned order was set aside, and the appeal was allowed by way of remand for a fresh decision in line with the Circular and the Apex Court decision. All issues except the plea for valuation under Section 4(i)(a) were left open for the appellant to raise in the new proceedings.