2000 (9) TMI 104 - AT - Central Excise

Summary

Issues:
1. Liability to Excise Duty under Section 11A of the Central Excise Act, 1944 and penalty under 173Q.
2. Captive consumption of Polyamide Chips for manufacturing Nylon Filament Yarn without payment of duty.
3. Reversal of credit on inputs used in the final product.
4. Valuation of captively consumed goods.
5. Imposition of penalty under Rule 173Q.

Analysis:
1. The appellants were held liable for Excise Duty amounting to Rs. 36,18,634 under Section 11A of the Central Excise Act, 1944, and a penalty of Rs. 4 lakhs under 173Q. The Commissioner de novo adjudicated the matter following CEGAT's directive.

2. The issue revolved around the captive consumption of Polyamide Chips by the assessee for manufacturing Nylon Filament Yarn without paying Central Excise duty. The demand for duty was based on the quantity and value of the chips consumed, calculated using specific formulas and pricing data.

3. The Commissioner found that the reversal of credit on inputs used in the final product was not relevant to absolve the duty payment on Polyamide Chips. The Commissioner refused to deduct the reversal of credit against the duty due, emphasizing the distinction between the final product and the input chips.

4. Regarding the valuation of captively consumed goods, the Commissioner's decision to fix the value at Rs. 78/- per Kg. based on a plea made at the hearing was deemed inappropriate. The valuation for captively consumed goods should be determined based on costing data, and the matter was remanded for re-determination of the value of Polyamide Chips.

5. The penalty of Rs. 4 lakhs imposed under Rule 173Q was set aside for redetermination based on the reworked value of the goods. The question of the imposition of penalty was left open for consideration during the de novo proceedings.

In conclusion, the appellate tribunal set aside the order and allowed the appeal for the de novo determination of the value and consequent demand of duty, emphasizing the need for accurate valuation and consideration of Modvat credit in reworking the penalty amount.