2014 (2) TMI 969 - AT - Central Excise

Valuation - determination of cost of prodcution - Incorrect CAS-4 figures - Held that - Adjudication order that the applicant withdrew their application seeking provisional assessment and assured that after finalization of annual accounts they will produce details of cost construction. It is also seen from the adjudication order that the applicant had not furnished the documents as assured by them. We also notice that Deputy Director (Cost) opined that Cost/Unit shown against Sl.No.20 with particulars cost of production of goods disposed should be taken for determination of cost of production for levy of duty in terms of Rule 8 of the Valuation Rules . We find that the duty was demanded on the basis of the opinion given by the Deputy Director (Cost), who is also an authority on this issue. In view of that, the applicant failed to make out a prima facie case for waiver of pre-deposit of the entire amount of tax - Conditional stay granted.

Summary

Issues:
- Demand of duty based on incorrect CAS-4 figures
- Barred by limitation
- Suppression of facts with intent to evade tax
- Withdrawal of application for provisional assessment

Analysis:
The judgment revolves around the demand of duty amounting to Rs.37,87,417 for the period from April '07 to May '08, based on the contention that the CAS-4 figures used for payment were incorrect. The applicant, engaged in manufacturing "SG Iron Rough Castings," cleared goods to their own unit at Coimbatore under Rule 8 of the Valuation Rules as per CAS-4. The original authority and Commissioner (Appeals) upheld the duty demand, leading to the appeal.

The appellant argued that the show-cause notice issued on 29.01.2011 was time-barred as they had paid duty based on CAS-4 and had not opted for provisional assessment, thus contending that the extended period of limitation should not apply. They emphasized that the CAS-4 was prepared in compliance with costing standards, contrary to the department's Deputy Director (Cost)'s opinion. The appellant highlighted that they submitted the CAS-4 on 3rd Aug. '09 for the period 2007-08, well before the notice was issued.

On the other hand, the respondent contended that the appellant discontinued provisional assessment and failed to submit the cost of production certificate as promised, indicating a suppression of facts to evade tax. The respondent supported the original authority's reliance on the Deputy Director (Cost)'s opinion, which detailed errors in the CAS-4.

The Tribunal, after considering both arguments and reviewing the records, noted that the appellant withdrew their request for provisional assessment and failed to provide the promised cost construction details. The Deputy Director (Cost)'s opinion was pivotal in determining the duty, and the appellant did not establish a prima facie case for waiving the pre-deposit of the tax amount. The Tribunal directed the appellant to make a pre-deposit of Rs.10 lakhs within eight weeks, with the balance amount, interest, and penalty to be waived upon compliance. The limitation aspect would be further examined during the appeal hearing, with recovery stayed until appeal disposal. Compliance was to be reported by 14th October 2013.