2010 (3) TMI 616 - AT - Central Excise

Valuation Captive Consumption - The dispute relates to valuation of the goods in question, which was captively consumed by the appellant. Identical goods sold to research institute in bulk quantities. No retail sale. Price of Rs. 125/- per Kg. upheld by Tribunal vide its earlier order, against which no appeal filed. No evidence of filing of subsequent price list and no change in law regarding valuation. Held that aforesaid price to be adopted upto 31.03.1994 from 1.4.1994 with amendment of Rule 173C of erstwhile Central Excise Rule, 1994 no requirement to file price list in respect of goods sold to research institute, though required to file price list in respect of goods sold to research institute, though required to file price list regarding captively cconsumed goods. Therefore, from 1.4.1994 appellant entitled to pay duty on assessable value based on cost construction method.

Issues involved:
Valuation of captively consumed goods, applicability of Section 4(1)(a) of the Central Excise Act, 1944, differential duty demand, penalty imposition, nature of sales to Research Institute, interpretation of Rule 6(b)(i) of Valuation Rules, period for adopting comparable price, consideration of legal grounds, approval of price-list, determination of assessable value, requirement for cost accountant's certificate, disposal of appeal.

Analysis:

1. Valuation of captively consumed goods:
The dispute in this appeal pertains to the valuation of goods captively consumed by the appellant between February 1993 and September 1995. The department argued that duty should have been paid based on the price of identical goods sold to a research institute, while the appellant used the cost-construction method. The original authority confirmed the demand of differential duty and imposed a penalty, which was upheld by the first appellate authority.

2. Nature of sales to Research Institute:
The appellant raised additional grounds regarding the nature of sales to the Research Institute, contending that they should be treated as retail sales, not wholesale, for the purpose of Section 4 of the Central Excise Act. The appellant argued that the price charged to the Research Institute should not be considered a comparable price under Rule 6(b)(i) of the Valuation Rules. The Tribunal allowed the incorporation of these additional grounds for legal arguments.

3. Approval of price-list and determination of assessable value:
The Tribunal previously considered the legality of the price-list for goods sold to the Research Institute, where the price was approved at Rs. 16.48 per kg, later revised to Rs. 125 per kg. The Tribunal's decision became final, and the approved price was deemed applicable for the subsequent period of dispute until 31-3-1994. After this date, the appellant was entitled to use the cost-construction method for valuation.

4. Requirement for cost accountant's certificate:
The respondent argued that the appellant did not correctly determine the assessable value for the period from 1-4-1994, suggesting the need for a cost accountant's certificate under Rule 6(b)(ii). The appellant maintained that there was no indication of incorrect valuation under Rule 6(b)(ii) in the show-cause notices. The Tribunal suggested addressing this issue before the original authority.

5. Disposal of appeal:
The Tribunal disposed of the appeal by directing the original authority to re-quantify the demand of duty up to 31-3-1994 and assess the correct duty amount for the subsequent period under Rule 6(b)(ii). The appellant was granted an opportunity to present evidence and be heard on this matter. The Tribunal held that the appellant was not liable for penalty in this case.

This detailed analysis covers the various legal issues involved in the judgment, addressing the arguments presented by both parties and the Tribunal's decision on each aspect of the case.

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