2015 (10) TMI 1685 - AT - Central Excise

Valuation of the goods - Job works - benefit of Notification No. 38/97-CE dated 27/06/1997 and Notification No. 9/98-CE dated 02/06/1998 - Held that - Appellant was receiving 80% by weight LDPE and 20% by weight LLDPE. However, while manufacturing the goods they were using 50% of LDPE and 50% of LLDPE. The additional LLDPE required was purchased from the local market and the excess quantity of LDPE received was detained by the appellant. Since the prices of LDPE and LLDPE are different and LDPE is comparatively costly material the difference in value has to be taken as additional consideration and hence will form part of the job-work. Accordingly, we hold that the difference in price of LDPE and LLDPE is required to be added for computation of the assessable value. - When the disputed period is 01/01/1998 to 31/03/1998 there is no reason to taken into account the value of LLDPE for the earlier or subsequent period. Either the appellant has to provide one-to-one co-relation of each consignment used in the manufacture of the goods or the average value during the period of three months required to be added. Since on-to-one co-relation of the value are not available, we order that the method adopted by the Revenue is correct and accordingly the value computed as also the turnover for the year 1997-98 is correct and the appellant will not be eligible for the benefit of Notification No. 9/98-CE dated 02/06/1998 for the subsequent period i.e. 1998-99. This is a clear case of suppression of facts and also willful mis-statement. The appellant have not declared that they are replacing the LDPE received from their customer by LLDPE, which is a cheaper material and it was only during investigation the same could be found out. We therefore, hold that extended period of limitation has been correctly invoked and penalty under Section 11AC is correctly imposed. - Decided against assessee.

Summary

Issues: Valuation of goods manufactured on the basis of job-work, consideration of LDPE and LLDPE value, eligibility for exemption under Notification No. 38/97-CE and 9/98-CE, invocation of extended period of limitation, penalty under Section 11AC.

Valuation of Goods Manufactured on the Basis of Job-Work:
The case involved the valuation of goods manufactured using LDPE and LLDPE in a specific ratio, with LDPE received from a customer and LLDPE purchased locally. The dispute centered around whether the difference in value between LDPE and LLDPE should be considered as additional consideration for the final product's valuation. The tribunal held that since LDPE and LLDPE prices differ and LDPE is costlier, the variance in value should be included in the assessable value of the goods.

Consideration of LDPE and LLDPE Value:
The appellant argued for considering the average value of LLDPE for the entire financial year to determine turnover eligibility for exemption under specific notifications. However, the Revenue contended that only the LLDPE value for the period of clearance should be considered. The tribunal sided with the Revenue, stating that for the disputed period, the value of LLDPE for that duration should be utilized unless a direct correlation per consignment is provided, concluding that the Revenue's method was appropriate.

Eligibility for Exemption Under Notification No. 38/97-CE and 9/98-CE:
The appellant's eligibility for exemption under the mentioned notifications hinged on the turnover calculation. The tribunal's decision on the valuation aspects impacted the appellant's eligibility for the exemption in subsequent periods, emphasizing the importance of accurate valuation methods in determining tax benefits.

Invocation of Extended Period of Limitation and Penalty Under Section 11AC:
The tribunal found that the case involved suppression of facts and willful misstatement by the appellant regarding the replacement of LDPE with cheaper LLDPE. Consequently, the tribunal upheld the invocation of the extended period of limitation and the imposition of a penalty under Section 11AC, highlighting the consequences of non-disclosure of material facts during investigations.

The judgment ultimately dismissed the appellant's appeal, emphasizing the significance of accurate valuation methods, adherence to tax regulations, and the implications of non-disclosure on penalty assessments and eligibility for tax exemptions.