1987 (2) TMI 252 - AT - Central Excise

Summary

Issues Involved:
1. Correctness of assessment under Notification No. 127/78-C.E.
2. Inclusion of sanding and leveling costs in the value of unveneered particle boards.
3. Mis-statement and time bar in demand enforcement.

Issue-wise Detailed Analysis:

1. Correctness of assessment under Notification No. 127/78-C.E.:
The appellant, the Collector of Central Excise, Indore, contested the assessment by the Collector of Central Excise (Appeals), New Delhi, regarding the value determination of unveneered particle boards under Notification No. 127/78-C.E., dated 24-5-1978. The notification allows exemption from excise duty equivalent to the duty on the value of unveneered particle boards. The appellant argued that the assessment incorrectly included the costs of sanding and leveling, which inflated the value of the unveneered boards and resulted in a larger deduction from excise duty.

2. Inclusion of sanding and leveling costs in the value of unveneered particle boards:
The learned Counsel for the department argued that the factory only clears unsanded, unlevelled unveneered boards, and the sanding and leveling are done solely for veneering purposes. Therefore, these processes should not affect the value of unveneered boards. He emphasized that the value should be based on the market value of unsanded, unlevelled boards, as these are the ones sold in the market. The Counsel for the appellant maintained that the unveneered particle boards remain unveneered even after sanding and leveling, and thus, the costs incurred should be included in their value.

The Tribunal noted that the value of sanded and leveled unveneered boards is not determined by market forces as they are not sold. The value must be the normal price at which goods are sold, which in this case, are the unsanded, unlevelled unveneered boards. The Tribunal concluded that the cost of sanding and leveling is incidental and preparatory to veneering and should not be included in the value of unveneered particle boards.

3. Mis-statement and time bar in demand enforcement:
The learned Counsel for the appellant argued there was no mis-statement, but rather a misunderstanding in the interpretation of the notification. The Assistant Collector had earlier mentioned a mis-statement but did not impose any penalty, indicating a lack of fraudulent intent. The Tribunal agreed, stating that an incorrect interpretation does not amount to a mis-statement. Consequently, the demands can only be enforced within the six-month time bar as prescribed by law.

Conclusion:
The Tribunal set aside the order-in-appeal, emphasizing that the costs of sanding and leveling should not be included in the value of unveneered particle boards for excise duty exemption purposes. The demands against the manufacturer were upheld but limited to the six-month period due to the absence of mis-statement.