2013 (11) TMI 1563 - AT - Central Excise

Summary

Issues involved: Application for waiver of duty and penalty u/s Rule 27 of the Central Excise Rules, 2002.

Summary:
The Applicant, engaged in manufacturing lubricating oils, sought waiver of duty and penalty imposed under Rule 27 of the Central Excise Rules, 2002. The Applicant determined the value of goods based on the Cost Construction Method (CAS) and paid duty @ 110% of the cost of production from a previous period. The Department contended that the cost of production for the relevant period should have been considered. The Applicant argued that it's difficult to ascertain the exact cost for a specific quarter and that the issue is revenue-neutral due to Cenvat credit availability for sister units. The Revenue supported the Adjudicating Commissioner's findings.

Upon review, it was noted that value determination under Section 4(1)(a) of the Central Excise Act, 1944 requires consideration of the cost of manufactured goods at the time and place of removal. The Applicant should have used the cost of production during the relevant period for goods transferred to sister units. The Applicant's argument against provisional assessment was dismissed as Rule 7 of the Central Excise Rules, 2002 allows for provisional assessment in such cases. The Applicant was directed to make a pre-deposit of 25% of the duty within eight weeks, with the balance dues waived and recovery stayed during the Appeal's pendency.

In conclusion, the Applicant's request for waiver of duty and penalty was partially granted, subject to the pre-deposit requirement and compliance deadline set by the Tribunal.