2008 (10) TMI 228 - AT - Central Excise

Valuation Free of cost (FOC) supply Held that - As there was no suppression of facts with an intention to evade duty, the major portion of the demand for the period from 02/96 to 01/98 was hit by the limitation of time bar. Even otherwise also, on merits of the case, the entire demand is not sustainable as on perusal of the tender & purchase order, it is clear that the contracted value is deemed to be the normal price i.e. the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal where the buyer is not a related person and the price is the sole consideration for the sale as defined in Section 4(1)(a) of CEA 1944 revenue appeal rejected.

Summary

Issues:
1. Mis-declaration of assessable value by not including the cost of Waste Filter Cake.
2. Dispute over the inclusion of the value of waste filter cake in the assessable value of Calcium Petroleum Sulphonate (CPS).
3. Whether the recovery of CPS amounts to manufacturing.
4. Interpretation of contractual obligations between the parties regarding the supply of waste filter cake.

Issue 1: Mis-declaration of assessable value:
The respondent, engaged in manufacturing Calcium Petroleum Sulphonate (CPS), was alleged to have mis-declared the assessable value by excluding the cost of Waste Filter Cake. The adjudicating authority confirmed the duty differential and imposed penalties, which were later set aside by the Commissioner (Appeals).

Issue 2: Inclusion of waste filter cake value in CPS assessable value:
The Revenue contended that the cost of waste filter cake should be included in the value of CPS due to the contractual obligations between the respondent and Lubrizol India Ltd. They argued that the recovery of CPS was done under the supervision and technical support of Lubrizol India Ltd., justifying the addition of the waste filter cake value to the assessable value of CPS.

Issue 3: Recovery of CPS as manufacturing:
The respondent argued that the recovery of CPS does not amount to manufacturing, and hence, the value arrived at for CPS was correct. They also cited a tribunal decision declaring waste filter cake as non-excisable, emphasizing that the addition of its value was unnecessary.

Issue 4: Interpretation of contractual obligations:
The tribunal analyzed the contractual relationship between the parties, noting that the waste filter cake was supplied free of cost by Lubrizol India Ltd. The tribunal referred to a previous tribunal order confirming that waste filter cake was not excisable, supporting the respondent's position.

The tribunal found that the impugned order was well-reasoned and upheld it, rejecting the appeal. The decision was based on the contractual terms, the non-excisability of waste filter cake, and the lack of manufacturing activity in the recovery of CPS. The tribunal's analysis considered the technical support provided, the contractual obligations, and the legal precedents regarding the excisability of waste filter cake.