2018 (2) TMI 1434 - AT - Central Excise

Clandestine removal - Zinc - shortage of raw material - Held that - zinc was lying in the tank which is raw material - In the impugned order, there is no reference regarding the zinc which was lying in the tank. During the course of argument, it is submitted that six months before the computation of the raw material was also made where the element of the zinc was considered. When it is so, then we set aside the impugned order in this regard and remand the matter to the original authority to decide the shortage of the raw material - matter on remand. Valuation - includibility - value of bought out items - Held that - identical issue has come up before the Tribunal in the case of Bharat Sanchar Nigam Ltd. Vs. CCE, Raipur 2018 (2) TMI 1384 - CESTAT NEW DELHI , where it was held that the towers were used by the assessee-appellants for only transmission of the signals without carrying out any further business activity, amount not includible - decided in favor of appellant. Decided partly in favor of appellant and part matter on remand.

Summary

Issues:
1. Shortage of raw material - zinc value not considered correctly by the department.
2. Demand of duty on supplied items - dispute over valuation of goods not manufactured by the appellant.

Analysis:
1. The appeal was against an order by the Commissioner regarding a shortage of raw material at the appellant's premises. The appellant argued that the zinc value, lying in the tank, was not correctly considered by the department. The Tribunal found that the zinc, being raw material, was not addressed in the impugned order. It was noted that the element of zinc was considered in a previous computation of raw material. Consequently, the Tribunal set aside the order and remanded the matter to the original authority for a proper decision on the raw material shortage.

2. The main issue involved the demand of duty on supplied items that were not manufactured by the appellant but consumed for erecting towers. The appellant challenged the valuation of these goods under Rule 11 of the Central Excise Valuation Rules. The Tribunal referred to a previous case involving a similar issue and highlighted Rule 8, which states that if goods are used for consumption in the production of other articles, the value shall be 110% of the cost of production. Additionally, Rule 11 allows for determining the value using reasonable means consistent with the rules and provisions of the Central Excise Act. The Tribunal also cited a Supreme Court case where a similar claim was allowed. Ultimately, following precedent, the Tribunal set aside the impugned order and allowed the appeal, granting relief to the appellant.

In conclusion, the Tribunal partially allowed the appeal, addressing the issues of raw material shortage and the demand of duty on supplied items. The decision was based on the interpretation of relevant rules and previous judgments, ensuring a fair and just outcome for the appellant.