2011 (10) TMI 411 - AT - Central Excise

Valuation - Appellant Job worker - Show cause notice - Cleared goods by not disclosing cost of free facilities - Held - Entire pipes which were fabricated by the appellant were consumed by M/s. Essar Steel Limited for the purpose of construction of Sardar Sarovar Drinking Water Project. These pipes were not sold by M/s. Essar Limited and hence considered as captively consumed. If the goods were captively consumed, the provisions of Valuation Rules, 2000 will apply.Moreover when invoices were attached to RT-12 department had the knowledge of assessee s action of fabrication of pipes. Hence the show cause notice dated 24.3.2004 is time-barred

Summary

Issues: Valuation of goods fabricated from free materials supplied by another company, Allegations of mis-declaration and suppression of facts, Imposition of penalty on the company and its PRO, Time-barred show cause notice

Valuation of Goods:
The appeal revolves around the valuation of MS Pipes fabricated by the appellant using free materials supplied by M/s. Essar Steels Limited for a specific project. The appellant's site was provided by M/s. Essar Limited, and they were registered with the Central Excise department for that site. The issue primarily concerns whether the goods should be considered as sold by the appellant or captively consumed by M/s. Essar Limited for the project. The contract between the parties outlines the scope of work, with M/s. Essar Limited providing space, power, and water for fabrication. The Tribunal analyzed various documents, including invoices and work orders, to determine the nature of the transaction and the applicability of Valuation Rules, 2000.

Mis-declaration and Suppression of Facts:
The lower authorities alleged that the appellant had cleared goods by undervaluing them and not disclosing the cost of free facilities provided by the supplier. The show cause notice accused the appellant of mis-declaration and suppression of facts related to the receipt of free goods, additional considerations from buyers, and non-inclusion of freight charges. The adjudicating authority confirmed the demand for duty, interest, and penalties on the company and its PRO. However, the Commissioner (Appeals) set aside the personal penalty on the PRO. The appellant argued that they had not suppressed any material facts, citing invoices and agreements to support their position. The Tribunal examined the submissions of both parties to determine if there was any intentional evasion of duty by the appellant.

Imposition of Penalty:
The order in original imposed penalties on the company and its PRO, which were partially upheld by the Commissioner (Appeals). The appellant challenged the imposition of penalties, contending that there was no intention to evade duty and that all relevant documents were provided to the authorities. The Tribunal considered the actions of the appellant, including filing RT-12 returns and providing duty paying documents, to assess whether there was a deliberate attempt to suppress information.

Time-barred Show Cause Notice:
The show cause notice dated 24.3.2004 was issued based on alleged mis-declaration and suppression of facts by the appellant. However, the Tribunal found that the notice was time-barred since the appellant's actions, including the fabrication of pipes at the site provided by M/s. Essar Limited, were known to the Revenue authorities. The Tribunal concluded that there was no suppression on the part of the appellant, and therefore, set aside the impugned orders and allowed the appeal with any consequential relief.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Ahmedabad highlights the key issues of valuation of goods, allegations of mis-declaration and suppression of facts, imposition of penalties, and the time-barred nature of the show cause notice. The Tribunal's thorough examination of the facts, documents, and submissions from both parties led to the decision to set aside the orders and provide relief to the appellant based on the lack of intentional evasion of duty and the knowledge of the Revenue authorities regarding the appellant's activities.