2011 (8) TMI 640 - AT - Central Excise

Valuation - Inclusion of octroi, transport, loading and unloading charges, manufacturing expenses, wastage in the assessable value of yarn - Held That - Annexure-A has shown octroi, transport charges and manufacturing expenses are claimed to be inclusive in the cost of raw materials. Case remanded back to verify these charges are separately shown or not as claimed by the appellants.

Summary

Issues:
- Undervaluation of goods in job work basis
- Allegations of not adding various charges in assessable value
- Failure to file merchant manufacturer declaration
- Incorrect determination of duty

Undervaluation of Goods in Job Work Basis:
The appellants filed an appeal against show-cause notices alleging undervaluation of goods manufactured on job work basis. The department claimed that charges like Octroi, loading and unloading charges, manufacturing expenses, wastage, and manufacturing profit were not included in the assessable value of yarn. The Assistant Commissioner confirmed the show-cause notices, leading to an appeal before the Commissioner (Appeals), who remanded the matter for fresh adjudication. Subsequent show-cause notices were also issued, and all were confirmed by the Assistant Commissioner. The appeal before the Commissioner (Appeals) was rejected, prompting the appellants to appeal to the Tribunal.

Allegations of Not Adding Various Charges in Assessable Value:
The advocate for the appellants argued that the question at hand was whether Octroi, transport, and unloading charges were included in the landed cost of raw material received by the appellants. He contended that the department had inflated the assessable value by adding charges like Octroi, transportation, manufacturing expenses, and wastage, which he deemed arbitrary and illegal. On the other hand, the Revenue's representative defended the findings of the Commissioner (Appeals), stating that these elements were added to the assessable value only when the assessee failed to declare them separately.

Failure to File Merchant Manufacturer Declaration and Incorrect Determination of Duty:
The Tribunal observed that the main issue in the appeal was the inclusion of various charges in the assessable value of yarn manufactured by the appellants. The appellant claimed that certain charges were already included in the cost of raw materials, while the Revenue argued that demands were issued only when the charges were not shown separately. The Tribunal decided to remand the matter back to the original authority to determine whether the charges were separately shown in each case of the show-cause notices. The appellants were directed to be given a reasonable opportunity to present their case, with the Tribunal refraining from giving any findings on the merits of the case. The appeal was disposed of by way of remand, allowing the appellants to submit all evidence in support of their defense.