2009 (8) TMI 1066 - AT - Central Excise

Summary

Issues:
1. Confirmation of differential duty based on undervaluation of goods.
2. Consideration of assessable value by applicant's cost accountant versus Revenue-appointed cost accountant.
3. Imposition of penalties on Managing Director and Cost Accountant.
4. Eligibility for refund based on cost accountant's report.
5. Intent to evade duty in the case of goods cleared to sister unit.
6. Prima facie case for waiver of adjudged dues.

Analysis:

1. The Tribunal considered the confirmation of the differential duty due to undervaluation of goods by the applicant. The Revenue appointed an independent cost accountant under Section 14A of the Central Excise Act, 1944, leading to the demand for the differential duty. The adjudicating authority confirmed the duty, imposed penalties on the Managing Director and Cost Accountant, and also demanded applicable interest.

2. The applicant argued that they had paid excess duty on many items based on their cost accountant's valuation, which was higher than the Departmentally appointed cost accountant's valuation. The Tribunal noted that while there may be differences in valuation for some items, the overall assessable value calculated by the applicant was higher. They emphasized the need to consider the entire valuation of clearances and not selectively confirm duty based on lower valuations.

3. The Tribunal acknowledged the contention that the goods were cleared to the applicant's sister unit, where Cenvat credit was available, making the exercise revenue neutral. They found merit in the argument that there was no intention to evade duty in such circumstances. Consequently, the Tribunal found a prima facie case for the waiver of the adjudged dues and allowed the applications for waiver, staying the recovery of the amounts until the disposal of the appeals.

4. The Tribunal's decision highlighted the importance of considering the entire valuation of clearances and not selectively confirming duty based on lower valuations. They also emphasized the revenue-neutral nature of the exercise when goods are cleared to a sister unit where Cenvat credit is available, indicating no intention to evade duty. This approach led to the Tribunal finding a prima facie case for the waiver of adjudged dues and granting a stay on recovery pending appeal disposal.