2008 (12) TMI 556 - AT - Central Excise

Summary

Issues:
- Correct quantification of duty liability based on cost verification report
- Challenge to the levy of interest under Section 11AB
- Remand of the case for re-quantification of duty and consideration of connected issues

Analysis:
1. Correct Quantification of Duty Liability: The appellants, engaged in the manufacture of motor vehicles and parts, cleared parts of tractors to their sister units during the relevant period. Duty was paid on these parts based on the value determined under Rule 8 of the Central Excise Valuation Rules. The appellants followed a practice of adopting the cost of production prior to the financial year and then adjusting the assessable value accordingly. The department issued a show-cause notice demanding differential duty, interest, and penalty. The Commissioner confirmed the demand against the appellants. However, it was noted that the Dy. Director (Cost) verified the costing data submitted by the assessee for the year in question, and the verification report recommended accepting the certified CAS-4 statements for the year 2006-07. The Tribunal found that the Commissioner did not consider this crucial report for determining duty liability. Therefore, the case was remanded for correct quantification of duty based on the verification report.

2. Challenge to the Levy of Interest: The learned Jt. CDR submitted that the assessee challenged the order for the levy of interest under Section 11AB on legal grounds. The suggestion was made to settle the interest-related issue at the current stage. However, the Tribunal decided that any decision on interest would depend on the quantification of duty liability. Therefore, the interest-related issue was to be addressed after the correct quantification of duty by the Commissioner upon remand.

3. Remand of the Case: After considering the facts and circumstances, the Tribunal decided to remand the case for re-quantification of duty by the Commissioner. It was emphasized that the Commissioner should consider the cost verification report and all connected issues while determining the duty liability. The impugned order was set aside, and the appeal was allowed by way of remand, directing the Commissioner to re-quantify the duty for the disputed period and decide on related matters after providing the assessee with a reasonable opportunity to be heard. The open remand was deemed necessary due to the failure to consider the crucial verification report in the initial adjudication.