2014 (3) TMI 910 - AT - Central Excise

Valuation of goods - Textile articles - Job Work - Inclusion of traders profit, Octroi duty transportation charges, loading/unloading charges of fabrics and marketing expenses and interest - Held that - as per C.B.E. & C. Circular No. 619/10/2002-CX., dated 19-2-2002, the traders profit is not includible in the assessable value. The departmental officers are bound by board circular. Therefore, the demand of Rs. 0.94 for addition of traders profit is not sustainable. If at all the demand of transportation, loading/unloading charges and manufacturing expenses are to be taken into account to arrive assessable value, the respondent has already included Rs. 0.75 per metre in the assessable value after adopting the formula as laid down by the Apex Court in the case of Ujagar Prints 1988 (11) TMI 106 - SUPREME COURT OF INDIA that is cost of raw material Job charges. Therefore, the charges made in the show-cause notice are not sustainable - Decided against Revenue.

Summary

Issues:
Appeal against adjudication order for demanding additional duty, interest, and penalty - Inclusion of traders profit in assessable value - Allegation of undervaluation of fabrics - Challenge to adjudication order - Interpretation of C.B.E. & C. Circular No. 619/10/2002-CX - Bar on invoking extended period of limitation.

Analysis:
The appeal before the Appellate Tribunal CESTAT MUMBAI involved a dispute where the Revenue contested an order by the Commissioner (Appeals) that set aside an adjudication order demanding additional duty, interest, and penalty on the respondent. The case revolved around the inclusion of traders profit in the assessable value of fabrics manufactured by the respondent. The department alleged undervaluation of fabrics due to the exclusion of various charges like Octroi duty, transportation costs, loading/unloading charges, and marketing expenses. The adjudicating authority confirmed a differential duty on transportation, loading/unloading, manufacturing expenses, and traders profit, which was challenged by the respondent.

The key contention from the Revenue was that transportation costs, manufacturing expenses, and traders profit should be included in the assessable value, thus challenging the decision of the Commissioner (Appeals). On the other hand, the respondent argued, citing C.B.E. & C. Circular No. 619/10/2002-CX, that traders profit should not be included in the assessable value. The respondent maintained that they had already accounted for certain charges in the assessable value and that the demands were not sustainable. Additionally, the respondent claimed that the activity undertaken, scoring of fabrics, was duty-exempt, further supporting their position.

Upon hearing both sides, the Tribunal analyzed the submissions and upheld that as per the circular, traders profit should not be included in the assessable value. The Tribunal emphasized that the departmental officers must adhere to the circular, rendering the demand for traders profit addition unsustainable. Furthermore, the Tribunal noted that the respondent had already accounted for certain charges in the assessable value based on the formula established by the Apex Court. Consequently, the charges mentioned in the show-cause notice were deemed unsustainable.

While the Commissioner (Appeals) did not address the limitation issue, the Tribunal, given the respondent's success on the merits, opted not to delve into the limitation matter. Ultimately, the Tribunal found no merit in the Revenue's appeal, thereby upholding the impugned order and dismissing the Revenue's appeal. The cross-objections were also disposed of accordingly.