2004 (11) TMI 131 - AT - Central Excise

Summary

Issues:
1. Demand of duty and penalty on clearances of washing machines to sister concern.
2. Valuation of goods based on sales to customers versus transfer to sister unit.
3. Challenge on limitation period for issuing show cause notice.

Analysis:

Issue 1: The appellate tribunal confirmed a demand of duty and penalty against the appellants for clearances of washing machines to their sister concern. The assessable value was determined based on the price at which goods were sold to independent buyers, resulting in a duty demand of Rs. 31,516/- along with an identical penalty.

Issue 2: The appellants argued that while they sold identical goods to customers at a higher price inclusive of profit margin, the transfer of goods to their Bhopal unit was based on cost data without adding profit margin. However, the tribunal held that under Valuation Rules, the value for unsold goods must be determined based on similar goods sold to others. Since the goods were sold at a higher price to other customers, the same value should apply to transfers to the sister unit.

Issue 3: The appellants challenged the order on the grounds of limitation, contending that the show cause notice was issued beyond the normal period. The appellants claimed that any duty paid was available to their Bhopal unit as Modvat credit, indicating no intention to evade duty. However, citing a previous judgment, the tribunal rejected this argument, emphasizing that such circumstances do not absolve the assessee of suppression. Consequently, the demand of duty was upheld, with a reduced penalty of Rs. 15,000/- due to the specific circumstances of the case.

In conclusion, the tribunal confirmed the duty demand against the appellants, while modifying the penalty amount. The appeal was rejected except for the adjustment in the penalty quantum.