1990 (10) TMI 201 - AT - Central Excise

Summary

Issues: Alleged evasion of Central Excise duty by deflection of compressor value to accessories. Computation of assessable value of compressors under Section 4 of CESA or Valuation Rules.

The judgment pertains to an appeal regarding the alleged evasion of Central Excise duty by deflection of the value of ammonia compressors to accessories. The appellant, a partnership firm engaged in manufacturing compressors, was accused of evading duty amounting to Rs. 45,98,146.60 by misrepresenting the value of compressors. The appellant held an L-4 license as a small scale unit and availed exemptions available to S.S.I units. The Department alleged that the appellant raised separate bills for accessories at inflated values to suppress the real value of compressors for duty exemption purposes.

The main issue considered was the method of computing the assessable value of compressors, whether under Section 4 of the Central Excise and Salt Act (CESA) or Rule 6(b)(i) or 6(b)(ii) of the Valuation Rules. The Department valued the compressors significantly higher than the appellant's declared value. The appellant's declared value was based on price lists of another manufacturer and market enquiry. The Department alleged under-invoicing of compressors and over-invoicing of accessories. However, the Tribunal found discrepancies in the Department's computation method and ruled out Section 4 and Rule 6(b)(i) due to lack of comparable prices.

The Tribunal noted that the Department's costing method, based on Rule 6(b)(ii), was flawed as it did not have costing data from the appellant and incorrectly included the value of all accessories while calculating the assessable value of compressors. The Tribunal referred to a similar case where expert costing data was used, and deemed it the correct method. Consequently, the Tribunal set aside the order and remanded the matter to determine the correct assessable value based on the costing data provided by the Advisor (Cost), Ministry of Finance. The appeal was allowed by way of remand, avoiding the need to address other contentions raised by the parties.