2000 (7) TMI 202 - AT - Central Excise

Summary

Issues Involved:
1. Alleged undervaluation of goods at the job worker's end.
2. Determination of assessable value of goods.
3. Applicability of Supreme Court decisions.
4. Provisional assessments and their finalization.
5. Imposition of penalties.

Detailed Analysis:

1. Alleged Undervaluation of Goods at the Job Worker's End:
The central issue was the allegation that the appellants had undervalued goods at the job worker's end, resulting in short payment of duty. The appellants were accused of wilfully mis-stating and suppressing facts with the intent to evade duty. The job workers, who were independent firms, performed tasks such as assembling and packaging shaving products based on components and materials supplied by the appellants. The job workers were paid job charges plus the central excise duty payable on the finished products.

2. Determination of Assessable Value of Goods:
The controversy revolved around the correct method for determining the assessable value of the goods. The show cause notices issued to the job workers sought to include additional costs such as central excise duty, sales tax, and freight forwarding charges in the value of the raw materials. The Commissioner concluded that the relationship between the appellants and the job workers was not on a principal-to-principal basis, but rather the job workers acted as a facade for the appellants' manufacturing activities. Consequently, the Commissioner determined the assessable value based on the sale prices of the appellants, which led to a confirmed duty demand of Rs. 5,56,54,032.

3. Applicability of Supreme Court Decisions:
The Commissioner initially held that the Supreme Court's decisions in the Ujagar Prints cases were not applicable, instead relying on the Pawan Biscuits case. However, the Supreme Court in an appeal from the Pawan Biscuits case concluded that the facts were similar to the Ujagar Prints cases, thus making the ratio of the Ujagar Prints cases applicable. The Tribunal found that the Commissioner's attempt to distinguish the present case from the Ujagar Prints cases could not be upheld, leading to the setting aside of the Commissioner's order.

4. Provisional Assessments and Their Finalization:
Certain assessments were provisional, and the Commissioner attempted to apply the Delhi High Court's decision in Duncan Agro Ind. Ltd. to overcome the Supreme Court's decision in Godrej & Boyce. The Tribunal held that these provisional assessments should be remanded back to the jurisdictional proper officer for determination and finalization as per law.

5. Imposition of Penalties:
The Commissioner imposed penalties under various rules and sections, including penalties on individual partners and directors. The Tribunal found no reason to uphold the duty confirmed by the Commissioner or the appropriations made. The penalties were also set aside, as the Tribunal did not find any cause to invoke the penalty clauses determined in the impugned order.

Conclusion:
The Tribunal set aside the order of demand of duty, appropriations of amounts, and penalties imposed by the Commissioner. The cases of provisional assessments were remitted to the jurisdictional proper officer for determination and finalization as provided by law. The appeals were allowed in favor of the appellants.