2015 (10) TMI 2271 - AT - Central Excise

Valuation - Captive consumption - Invocation of extended period of limitation - Held that - prices may vary from component to component but by very nature of casting the price will not vary so much. In any case, the grounds of appeal it is presumed without any supporting evidence that the casting which were sold to independent buyers were different from the castings captively consumed. Similarly, it is only the apprehension that the date of invoices for independent buyers is different from the date of invoice for captive consumption. Even if these dates are different the prices of casting will not vary on day to day basis but would be fairly stable. Revenue has not produced any evidence that the dates of the invoice produced before the Commissioner were so much different from the date of captive consumed goods that the prices are necessarily different. In the absence of these details, we do not find any merits in the contention of the appeal filed by the revenue and we agree with the finding of the Commissioner extracted above. Even on limitation, we find respondent has a very strong case. - Decided against Revenue.

Summary

Issues:
Dispute over the value of castings used for captive consumption, demand of duty, interest, and penalty by Revenue, application of Central Excise (Valuation) Rules, 1975, production of costing details, comparison of prices for captive consumption and sales to independent buyers, relevance of invoices, differentiation of castings, limitation on appeal.

Analysis:
The case involves a dispute regarding the value of castings used for captive consumption by the respondent assessee, who is engaged in manufacturing castings for pumps. The Revenue demanded duty of Rs. 21,51,773 invoking the extended period of limitation, interest, and penalty under Section 11AC. The respondent was filing price declarations supported by a Chartered Accountant certificate for the captively consumed castings, based on which goods were cleared on payment of duty. However, the Revenue later asked for detailed workings supporting the certificate, which the respondent failed to produce. The Revenue issued a show-cause notice for the duty demand, which was dropped by the Commissioner in the impugned order.

The Revenue appealed against the Commissioner's order, arguing that the castings sold to independent buyers at a lower price than the captive consumption price should not lead to further duty demand under Rule 6(b) of the Central Excise (Valuation) Rules. The appellant contended that the castings sold to independent buyers were different from those captively consumed, and the lack of specific dates on invoices raised doubts about the pricing comparison. However, the Commissioner noted that the price declared for captively consumed goods was consistently higher than the price for sales to independent buyers, indicating compliance with valuation rules.

Upon review, the Tribunal found no merit in the Revenue's appeal. The Tribunal highlighted that while prices may vary for different components of castings, the nature of castings ensures a certain stability in pricing. The Tribunal emphasized that without evidence to support the claim that the castings sold to independent buyers were different or that the invoice dates significantly affected pricing, the Revenue's appeal lacked justification. Additionally, the Tribunal noted the respondent's strong case on limitation. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the Commissioner's decision.

In conclusion, the Tribunal's analysis focused on the consistency of pricing for captively consumed castings, the lack of substantial evidence supporting the Revenue's claims of differentiation in castings or significant pricing variations, and the respondent's compliance with valuation rules. The decision underscores the importance of substantiated claims in duty demands and the need for clear evidence to support allegations of under-valuation.