2005 (10) TMI 123 - AT - Central Excise

Summary

Issues:
Valuation of goods based on cost construction method and disputed deductions.

Analysis:
The appeal was against Order-in-Appeal No. 141/99 passed by the Commissioner of Central Excise (Appeals), Hyderabad. The appellants were involved in manufacturing steel furniture and transferred goods to depots for later sale to customers. Dispute arose regarding valuation of goods, with the Department issuing 21 show cause notices seeking to adopt depot selling price and allow deduction only towards freight of 1.41%. The appellants claimed deductions for various elements including equalized freight, trade discount, and interest on deferred payment. They argued that the difference between depot selling price and assessable value represented admissible deductions like cost of freight, unloading, reloading, and installation. Lower authorities confirmed demands, which were upheld by the Commissioner (Appeals), leading to the appellants challenging these findings.

The learned advocate for the appellants contended that the pricelists based on cost construction method had been approved by the Department, and previous actions by the authorities had been dropped without challenge. Citing legal precedents, they argued that the demands could not be confirmed without challenging the pricelist approvals. The advocate also asserted that deductions claimed were admissible, including equalized freight and post-manufacturing expenses like unloading at customer sites and installation costs. The SDR reiterated the order-in-original, but the Tribunal found in favor of the appellants on the issue of equalized freight, allowing the deduction. Other deductions were disallowed based on the Apex Court's decisions.

The Tribunal noted that the same issue had been adjudicated in favor of the appellant in earlier proceedings that were not appealed against. The Order-in-Original limited freight deduction to 1.41%, which was deemed arbitrary. The Tribunal held that the appellants were entitled to deduction for equalized freight and upheld the Order-in-Original partially, allowing the deduction. Other claims for deductions were denied based on the Apex Court's decisions. The appeal was allowed in part, with the judgment pronounced on 7-10-2005.