2016 (7) TMI 553 - AT - Central Excise

Suppression/mis-declaration - under valuation of the scraps - comparable goods by another supplier at a much higher price available - Held that - We find that the show-cause notices issued by the lower authorities do not bring out any facts by which it could be said that the appellants were aware of under valuation of the scraps supplied by M/s.Greaves Ltd. to them. There is nothing on record to establish that the appellants were aware of the similar products being manufactured by another job worker M/s.Transmissions, Bombay and supply of the same was at a higher assessable value. The appellants have clearly declared in their invoices that they are converting the scraps supplied by M/s.Greaves into ingots and the invoices clearly shows the manner in which they arrived at the assessable value for the purpose of Central Excise duty. The Hon ble Supreme Court in the case of Ujagar Prints (1989 (1) TMI 124 - SUPREME COURT OF INDIA) has held that the valuation of goods produced on job work basis would be done on the basis of cost of material supplied and the processing charges. The invoices issued by the appellants are in consonance with the said decision of the Hon ble Supreme Court. In these circumstances, we find that there is no express or implies suppression/mis-declaration by the appellant. The argument of the learned AR that the appellants had purchased the material from M/s.Greaves Ltd. also does not help the revenue. So long as it is not established that the appellants were aware of the supply of comparable goods by another supplier at a much higher price. In the instant case there is no evidence that the appellants have recovered any price higher than the declared in the invoice. In these circumstances even if the arguments of the revenue that the appellants had purchased the material from M/s.Greaves Ltd. there is no suppression or mis-declaration forthcoming. Notice is barred by limitation. - Decided in favour of assessee.

Summary

Issues:
Valuation of ingots based on comparative prices, Mis-declaration of value of scraps, Invocation of extended period of limitation, Job work basis valuation, Suppression of facts, Non-filing of price declaration.

Valuation of ingots based on comparative prices:
The case involved a dispute regarding the valuation of ingots manufactured by the appellant based on the comparative prices adopted by another party. The show-cause notice sought to enhance the value of the ingots by invoking Rule 6 (b) (i) of the Central Excise Valuation Rules. The period of dispute was specified, and the notice was issued within the extended period of limitation.

Mis-declaration of value of scraps:
The appellant had received scraps from a supplier, which were later melted to manufacture ingots. It was alleged that the supplier had under-valued the scraps, leading to a duty confirmation against them. The appellant, however, argued that they were not aware of any mis-declaration by the supplier and had valued their goods based on the declared scrap value and conversion charges.

Invocation of extended period of limitation:
The Revenue sought to invoke the extended period of limitation based on the assertion that the appellant had purchased scrap from the supplier, and there was a mis-declaration on the invoice regarding the price actually charged. The argument was made that the appellant cannot claim manufacturing on a job work basis and that the extended period of limitation could be invoked.

Job work basis valuation:
The appellant contended that they had manufactured the ingots on a job work basis, following the valuation method as per the decision of the Hon'ble Supreme Court. Invoices issued by the appellant indicated the conversion of scraps into ingots and the assessable value based on raw material cost and labor charges, in line with the Supreme Court's decision.

Suppression of facts and non-filing of price declaration:
The Revenue argued that the appellant's failure to file a price declaration for manufacturing on a job work basis amounted to suppression of facts with the intention to evade duty. However, the Tribunal found no evidence of suppression or mis-declaration by the appellant, as they were not aware of the under-valuation of scraps by the supplier or the higher assessable value adopted by another party.

In conclusion, the Tribunal held that the notice was barred by limitation as there was no evidence of suppression or mis-declaration by the appellant. The impugned order was set aside, and the appeal was allowed.