2005 (3) TMI 374 - AT - Central Excise

Valuation (Central Excise) - Captive consumption - Lagging sheets - Demand and penalty - Manufacture

Summary

Issues:
1. Valuation of goods for duty calculation based on CAS-4 standard
2. Duty liability on re-packing imported goods
3. Manufacturing status of Saroth Bonds
4. Imposition of penalties
5. Duty liability on VT Belt cleaners and Spilnil system
6. Cutting conveyer belting activity as manufacturing
7. Valuation of goods based on cum-duty price

Analysis:

1. Valuation of goods for duty calculation based on CAS-4 standard:
The appellant contested the duty demand based on the valuation of lagging sheets, arguing that CAS-4 standard should be applied as per a Circular issued by the Board. The Tribunal agreed with the appellant, stating that CAS-4 is a valid standard developed in consultation with professional bodies and must be applied to pending matters. The Tribunal found no merit in the Revenue's objection that CAS-4 was not applicable due to being developed subsequently, emphasizing that the Circular clearly mandated valuation in terms of CAS-4. The matter was remanded to the original authority for re-consideration in line with CAS-4.

2. Duty liability on re-packing imported goods:
Regarding the duty liability on re-packing imported goods, the Revenue contended that a Circular exempting duty did not apply to the appellant as they re-packed already packed goods, unlike goods brought in Lorry Tankers. The Tribunal upheld the duty demand, noting that the Circular did not cover the appellant's situation as they re-packed goods brought in bulk barrels, which constituted re-packing. Consequently, the duty demand was confirmed.

3. Manufacturing status of Saroth Bonds:
A significant portion of the duty demand was based on the appellant being considered the manufacturer of goods under the name of Saroth Bonds. The Tribunal observed that a previous order by the Deputy Commissioner had determined Saroth Bonds as a separate unit, a decision not appealed by the Revenue, making it final. As the Commissioner overlooked this decision, the Tribunal set aside the duty demand related to Saroth Bonds.

4. Imposition of penalties:
Penalties were imposed on the manufacturer and functionaries, with the appellant arguing against their justification. The Tribunal found no personal liability on the directors and set aside their penalties. However, due to upheld duty demands, a reduced penalty was imposed on the appellant in line with Section 11AC.

5. Duty liability on VT Belt cleaners and Spilnil system:
The Revenue's appeal focused on duty liability for VT Belt cleaners and Spilnil system, alleging manufacturing by the appellant. The Tribunal examined the assembly process and location of system creation, determining that duty was not attracted as the systems came into existence on-site assembly, not in the appellant's factory. The duty demand in this regard was not sustained.

6. Cutting conveyer belting activity as manufacturing:
The Revenue claimed that cutting conveyer belting constituted manufacturing, which the Tribunal rejected. Cutting belting, like other materials, did not amount to manufacturing, leading to no duty liability.

7. Valuation of goods based on cum-duty price:
The Revenue disputed the Commissioner's decision to treat sale price as cum-duty price for valuation, citing a Supreme Court judgment. The Tribunal dismissed this contention, noting the Apex Court's dismissal of the Revenue's review petition against the relevant judgment. All appeals were disposed of accordingly.