2017 (2) TMI 885 - AT - Central Excise

Refund claim - payment of duty under protest - payment of duty on 110% of production cost - Held that - facts did not warrant levying Central Excise duty on enhanced assessable value, where 10% notional profit was added to the cost of the goods in terms of Rule 8 read with Rule 9 not Rule 4(b) as mentioned by the notice of Central Excise Valuation (Determination of Price of Excisable goods) Rules, 2000 read with provisions of Section 4(1) (b) of the Central Excise Act, 1944 - refund to be allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim of duty of excise paid by the appellant on Tower Components manufactured and cleared for internal use. Applicability of Central Excise Valuation Rules and the decision of the Apex Court in P.C.C. Pole Factory case. Interpretation of rules regarding the calculation of assessable value and profit margin. Comparison with previous judgments and dismissal of departmental appeal. Application of legal provisions and procedural rules for refund claims.

Analysis:
The appellant, a telecom factory, filed a refund claim for duty of excise paid on Tower Components manufactured and used internally. The appellant contended that adding a profit margin to the cost of production was not justified as the components were for internal use only. They relied on the P.C.C. Pole Factory case where the Supreme Court held that adding profit margin for goods used internally was not sustainable. The appellant sought a refund of the excess excise duty paid. The Tribunal considered the arguments and case laws cited by both parties.

The appellant's advocate highlighted a previous order where a similar appeal was allowed, emphasizing that duty was not required on the entire cost of production. Additionally, a departmental appeal was dismissed in a related case. The advocate referenced specific case laws to support the appellant's position. The Revenue representative reiterated the contents of the impugned order.

The Tribunal referred to the P.C.C. Pole Factory case and concluded that adding a notional profit margin to the cost of goods for excise duty calculation was not warranted in this case. They set aside the order requiring the payment of duty on the enhanced assessable value. The Tribunal also cited a previous decision in the appellant's favor, emphasizing the incorrect application of procedural rules by the Revenue. Based on established legal principles, the Tribunal found no reason to uphold the impugned order and allowed the appeal with consequential relief.

In the final judgment pronounced on 11-01-2017, the Tribunal ruled in favor of the appellant, setting aside the order denying the refund claim. The decision was based on the interpretation of Central Excise Valuation Rules, comparison with relevant case laws, and the incorrect application of procedural rules by the Revenue, leading to the allowance of the appeal with consequential relief.