2004 (5) TMI 133 - AT - Central Excise

Summary

Issues: Challenge against order passed by Commissioner (Appeals) dated 30-5-2000 regarding Central Excise duty evasion and valuation of goods removed to sister unit.

Analysis:
1. The appellants, manufacturers of Printed and Laminated Sheets and Pouches, removed inputs to a sister unit after reversing the credit availed on those inputs, following Rule 52A of Central Excise Rules. A show cause notice was issued alleging contravention of various rules and evasion of Central Excise duty. The demand was based on not extending the value to 115% of the landed cost of inputs or cost of production as required by the Central Excise Act and Valuation Rules.

2. The appellant contended that they followed Circular No. 643/34/2002-C.E. issued by the Board, which clarified valuation provisions. The Circular addressed scenarios where inputs are removed to a sister unit without sale, stating that the value nearest to the time of removal should be adopted. The appellant argued that they followed this circular, and hence, the demand should not be sustained.

3. The appellant submitted a detailed reply on merits and argued that the demand was barred by limitation. However, the adjudicating authority confirmed the demand, which was upheld by the Commissioner (Appeals). The appellant then appealed, emphasizing compliance with the Board's circular and the valuation method adopted based on the invoice for Cenvat Credit.

4. The Tribunal noted that the appellant followed the procedure outlined in the Circular and that the Commissioner (Appeals) also referred to the circular. As the appellant's action was not against any statutory provision and they adopted the value based on the invoice for Cenvat Credit, the demand in the show cause notice was deemed unsustainable. Consequently, the order was set aside, and the appeal was allowed.

In conclusion, the Tribunal ruled in favor of the appellant, overturning the demand for Central Excise duty evasion based on the valuation method adopted in compliance with the Circular issued by the Board. The judgment emphasized the importance of following prescribed procedures and circulars to determine the appropriate valuation of goods for excise duty purposes.