2009 (8) TMI 1068 - AT - Central Excise

Valuation - includibility - whether the value of plant and machinery installed as on 1-3-01 or 1-5-01 exceeded ₹ 3 crore or not? - Held that - the decision of the Commissioner that the appellants in each case have crossed eligibility limit of 3 crores with respect to the value of plant and machinery and, therefore, are not eligible for exemption claimed is legally correct and sustainable - appeal dismissed - decided against appellant.

Issues Involved:
1. Eligibility for compounded levy scheme under Notification No. 16/01 N.T. and Notification No. 32/01 N.T.
2. Determination of the value of plant and machinery.
3. Applicability of Accounting Standards (AS 10) for valuation.
4. Validity of the appointment and actions of the Cost Accountant under Section 14A of the Central Excise Act.
5. Principles of natural justice in the valuation process.
6. Imposition of penalty.

Detailed Analysis:

1. Eligibility for Compounded Levy Scheme:
The primary issue was whether the appellants, M/s. Sulzer Processors Pvt. Ltd. and Shri Ganesh Texfab Ltd., were eligible for the compounded levy scheme under Notification No. 16/01 N.T. and Notification No. 32/01 N.T. The appellants declared the value of their plant and machinery as below Rs. 3 crores, supported by Chartered Accountant certificates. However, the Department's Cost Accountant determined the values to be above Rs. 3 crores, thus denying the benefit of the scheme.

2. Determination of the Value of Plant and Machinery:
The appellants argued that the value of certain items like DG sets, transformers, and effluent treatment plants should be excluded based on Central Government guidelines for small scale undertakings. The Department, however, included these items, following the Accounting Standards (AS 10) issued by the Institute of Chartered Accountants of India, which was mandated by the amended Notification No. 41/01.

3. Applicability of Accounting Standards (AS 10) for Valuation:
The Tribunal emphasized that the valuation should be done according to AS 10, as clarified by Notification No. 41/01. The Cost Accountant appointed by the Department followed AS 10, while the Chartered Accountant certificates from the appellants did not explicitly state adherence to AS 10. The Tribunal found the Department's valuation method to be correct and in compliance with the notifications.

4. Validity of the Appointment and Actions of the Cost Accountant under Section 14A:
The appellants contested the appointment and actions of the Cost Accountant under Section 14A, arguing that the proper procedures were not followed, including the requirement for the Chief Commissioner's concurrence. The Tribunal found that the Commissioner was justified in appointing an expert to verify the value of plant and machinery and that procedural lapses, if any, did not materially affect the outcome.

5. Principles of Natural Justice in the Valuation Process:
The appellants claimed a violation of natural justice, arguing that the Cost Accountant did not visit their factories and that they were not provided with certain documents. The Tribunal noted that the appellants had the opportunity to cross-examine the Cost Accountant and found no substantial evidence to support their claims of procedural unfairness.

6. Imposition of Penalty:
The Tribunal agreed with the appellants that no penalty should be imposed given the interpretative nature of the dispute regarding the notifications. Thus, while the demand for duty and interest was upheld, the penalty imposed on M/s. Sulzer Processors Pvt. Ltd. was vacated.

Conclusion:
- Shri Ganesh Texfab Ltd.: Appeal rejected.
- M/s. Sulzer Processors Pvt. Ltd.: Appeal rejected regarding duty and interest, but penalty vacated.

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