2002 (5) TMI 99 - AT - Central Excise

Summary

Issues involved: Alleged under-valuation due to non-inclusion of Modvat credit and scrap sale proceeds in assessable value; imposition of penalty and confiscation.

Modvat credit inclusion: The appellants, manufacturers of Railway Points and Crossing, faced allegations of under-valuation by not adding Modvat credit availed on free rails from Indian Railways to assessable value. The Commissioner confirmed duty demand of Rs. 31,50,950 under Rule 9(2) u/s 11A(1) and imposed a penalty of Rs. 3.5 lakhs. The appellants contended that the Modvat credit need not be included as per the Supreme Court's ruling in CCE, Pune v. Dai Ichi Karkaria Limited.

Scrap sale proceeds inclusion: Another issue was the alleged non-inclusion of money value of scrap generated from the free rails in assessable value. The department argued that the sale proceeds of scrap should be included as additional consideration. However, the appellants maintained that the value of scrap was already included in the assessable value, as per the contract terms, and thus no further inclusion was warranted.

Judgment: The Tribunal held that the Modvat credit need not be included in the assessable value, aligning with the Supreme Court's ruling. Additionally, the sale proceeds of scrap were deemed already accounted for in the assessable value, and hence no further inclusion was necessary. The appeal was allowed on both points, and the impugned order of the Commissioner was set aside. The issue of time bar on demand was not addressed due to the appeal's success on merits.