2004 (3) TMI 175 - AT - Central Excise

Summary

Issues:
1. Whether the cost of coating pipes post-manufacture should be included in the assessable value for excise duty calculation.
2. Whether duty demand and penalty imposed by Central Excise authorities are legally sustainable.

Analysis:

Issue 1:
The appellants, as part of a work contract, manufacture pipes and discharge excise duty upon removal from the factory. The pipes undergo additional processes like coating, done away from the factory. The Central Excise authorities demanded duty, including the cost of coating in the assessable value, resulting in a duty demand of over Rs. 1.2 crore and a penalty of equal amount. The appellant argued that costs incurred post-removal should not be part of the assessable value, citing the Supreme Court decision in Siddharth Tubes Limited v. C.C.E. The Circular No. 139/08/2000-CX.4 was also referenced to support this position.

Issue 2:
Upon reviewing the records and hearing the learned SDR, the Tribunal found the valuation method proposed by the authorities to be in direct conflict with the Supreme Court decision and the Circular issued by the Central Board of Excise and Customs. The Tribunal held that such proceedings must fail as they are contrary to established legal positions, ultimately allowing the appeals and setting aside the impugned order.