2002 (4) TMI 201 - AT - Central Excise

Issues Involved:
1. Valuation of products under Section 4 of the Central Excise Act.
2. Classification of certain products under the Central Excise Tariff Act.
3. Allegations of under-valuation and related penalties.
4. Time-barred demand for duty.
5. Relationship between companies and its impact on valuation.

Detailed Analysis:

1. Valuation of Products:
The primary issue in these appeals is the valuation of products manufactured by the Appellant Companies under Section 4 of the Central Excise Act. The Appellants argued that the valuation should be based on the highest price for bulk sales to Railways, not on small quantities sold at higher prices. They contended that if transport charges are deducted, the price declared for captive use would be comparable to bulk sale prices. The Tribunal found substance in this argument and noted that the valuation had been previously adjudicated, with some periods overlapping. Thus, there cannot be a second proceeding raising demand for the same period.

2. Classification of Products:
The classification of Thermit portions and dry moulds was contested. The Appellants argued that dry moulds should be classified under Heading 84.80 as "Moulds for Metal," rather than under Heading 68.07. The Tribunal agreed, noting that Heading 84.80 covers all moulds used for moulding metal, and Heading 68.07 is a residuary entry for other articles not specified elsewhere.

3. Allegations of Under-Valuation and Penalties:
The Department alleged under-valuation, claiming that the price for goods cleared for self-use was lower than the normal price. The Appellants countered that they had adopted a price of Rs. 25/- for dry moulds, supported by a purchase order from Railways. The Tribunal found no under-valuation, as the Appellants had produced evidence of bulk supply orders at comparable prices. Regarding penalties, the Tribunal noted that the penalty under Section 11AC cannot be imposed for periods before its enactment and that penalties under different rules require specific findings, which were not provided.

4. Time-Barred Demand for Duty:
The Appellants argued that the demand was time-barred as the Department was fully aware of their operations, and there was no suppression of facts. The Tribunal observed that classification lists were filed and approved by the Department, and details of raw materials and manufacturing processes were submitted. The Tribunal held that the extended period for demanding duty is not applicable without evidence of mis-statement or suppression of facts.

5. Relationship Between Companies:
The Department claimed that M/s. Asiatic Thermics Ltd. (A.T.L.) and M/s. India Thermit Corporation Ltd. (I.T.C.L.) were related persons, affecting the valuation. The Tribunal found that the relationship alone does not suffice to deem them related persons unless the price is influenced by extra-commercial considerations. The Tribunal noted that A.T.L. sold moulds to I.T.C.L. at the same price as to Railways, and there was no substantial evidence of packing or additional costs being incurred. Thus, the charge of under-valuation was not established, and no demand for duty or penalties could be imposed.

Conclusion:
The Tribunal upheld the classification of products except for dry moulds, which were classified under Heading 84.80. The valuation for captive use was found comparable to bulk sales, and no under-valuation was established. The demand for duty was deemed time-barred, and the companies were not considered related persons affecting valuation. All appeals were disposed of accordingly.

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