2010 (1) TMI 442 - AT - Central Excise

Valuation- The issue involved in this case is under valuation of pigments dyes and binders cleared by the appellants during the period from 1985-86 to 1995-96. The Revenue is in appeal against the order of the Commissioner (Appeals) who has held that in absence of any evidence of under valuation by the appellants produced by the Revenue, the admitted differential duty payable worked out as Rs. 18,01,878/- should be accepted. Held that - show cause notices were issued without proper application of mind or without proper verification of records. Under these circumstances the order of the Commissioner (Appeals) is reasonable. Consider that it would be appropriate to treat the matter as closed. Accordingly, reject the appeal filed by the Revenue.

Summary

Issues involved:
Under valuation of pigments dyes and binders cleared by the appellants during 1985-86 to 1995-96; Department's determination of value on a notional basis; Appellants' cooperation with the department in providing necessary details for finalization of value; Applicability of Circular No. 692/8/2003-CX and CAS-4 for determining cost of production; Allegations of arbitrary computation of value by the Department; Burden of proof on Department in case of under-valuation; Imposition of penalty and its reduction; Consideration of CAS-4 principles for past periods; Adequacy of evidence for establishing under-valuation; Finality of Commissioner (Appeals) order.

Analysis:
The case involves the issue of under-valuation of pigments dyes and binders cleared by the appellants over a decade, leading to a series of show cause notices and subsequent litigation up to the Tribunal level. The Revenue appealed against the Commissioner (Appeals) order accepting the admitted differential duty payable by the appellants. The Department determined the value on a notional basis due to lack of cooperation from the appellants in providing detailed cost construction data. The Department relied on Circular No. 692/8/2003-CX and judicial precedents to argue for the application of CAS-4 principles for cost determination.

The advocate for the respondents contended that the Department's computation of value was arbitrary, lacking proper justification or rule basis. The appellants had submitted cost sheets, but the Department rejected them without sufficient explanation. The burden of proof for under-valuation lies with the Department, and the appellants' admission of the outstanding duty amount was emphasized. The Commissioner (Appeals) made detailed findings, highlighting the Department's failure to produce concrete evidence of under-valuation despite prolonged investigations.

While agreeing with the applicability of CAS-4 principles, the Tribunal declined to remand the matter due to unavailability of records and lack of proper verification by the Department. The Tribunal found the Commissioner (Appeals) order reasonable, considering the admitted liability by the appellants and the lack of further evidence expected from the Department. Opening another round of litigation was deemed unnecessary, leading to the rejection of the Revenue's appeal.

In conclusion, the Tribunal upheld the Commissioner (Appeals) order, emphasizing the Department's failure to establish under-valuation and the appellants' admission and payment of the outstanding duty amount. The Tribunal's decision to treat the matter as closed reflects the practicality of the situation and avoids unnecessary prolongation of the legal dispute.