2016 (1) TMI 732 - AT - Central Excise

Determination of value - determination of cost of production of goods manufactured by another unit - cars manufactured by assesse for their own use - extended period of limitation invoked - whether details about the cost of production etc. were not made available to the department? - Held that - As in this case the cars cleared have not been utilized for further manufacture of goods but were used by the officials of the company in connection with the business. In our view, Rule 8 is not directly applicable and it would be more appropriate to determine the value under Rule 11 read with Rule 4 and the assessee has paid the duty correctly. We also find that the Larger Bench of this Tribunal in the case of Ispat Industries Ltd. (2007 (2) TMI 5 - CESTAT, MUMBAI ) supports the contention of the assessee. We also find force in the contention of the assessee that extended period is not invokable. We do not find any justifiable ground in the show cause notice so as to invoke the extended period. Even the learned Commissioner (Appeals) has dropped the penalty keeping in view the issue involved is interpretation of law. In our view, in the facts and circumstances of the case, invoking the extended period of limitation is not justified. - Decided in favour of assessee.

Summary

Issues:
1. Determination of assessable value under Rule 8 of the Central Excise Valuation Rules.
2. Applicability of Rule 11 in determining the value of excisable goods.
3. Invocation of extended period of limitation for duty demand.
4. Waiver of penalty based on interpretation of law.

Analysis:

Issue 1: Determination of assessable value under Rule 8
The appellant, a car manufacturer, cleared cars for their own use during 2002-03, calculating the value based on the applicable value for customers. Revenue contended that the value should be 115% of the cost of production under Rule 8. The original authority dropped the proceedings, but the Commissioner (Appeals) determined the value under Rule 11 with Rule 8, upholding the demand. The appellant argued that even under Rule 8, the demand would only be Rs. 27,566, less than the duty paid for two vehicles. They cited a Tribunal decision supporting their position. The Tribunal found Rule 8 not directly applicable as the cars were not used for further manufacturing, supporting the appellant's calculation and rejecting the extended period of limitation invoked by the Revenue.

Issue 2: Applicability of Rule 11
The Tribunal determined that Rule 11 read with Rule 4 was more appropriate for valuing the cars used by the company officials, rather than Rule 8. This decision aligned with the appellant's argument and the Tribunal's precedent in a similar case.

Issue 3: Invocation of extended period of limitation
The Revenue argued for the extended period of limitation based on discrepancies in the Chartered Accountant's certificate and the number of vehicles cleared. However, the Tribunal found no justification for invoking the extended period, as the necessary details were not provided to the department, and there was no suppression of facts by the appellant.

Issue 4: Waiver of penalty
The Commissioner (Appeals) waived the penalty due to the matter involving interpretation of law. The Tribunal upheld this decision, emphasizing that the issue did not warrant invoking the extended period of limitation. The appellant's appeal was allowed, the Revenue's appeal was dismissed, and cross objections were disposed of accordingly.

This comprehensive analysis of the judgment highlights the key legal issues, arguments presented by both parties, and the Tribunal's reasoning leading to the final decision.