1994 (2) TMI 177 - AT - Central Excise

Issues Involved:
1. Under-valuation of goods manufactured.
2. Manufacturing of compact packaged units at sites prior to installation.
3. Failure to inform the department about sales patterns and non-production of documents.
4. Clandestine removal of fully manufactured goods without payment of duty.
5. Discrepancies in the show cause notice.
6. Permissible deductions and valuation of goods.

Detailed Analysis:

Under-valuation of Goods Manufactured:
The adjudicating Principal Collector of Central Excise found that the appellants had under-valued the goods manufactured. The appellants were accused of charging higher prices from customers than those declared to the Central Excise Department for various air-conditioning and refrigeration components. This charge was established as per Para 89 of the order.

Manufacturing of Compact Packaged Units at Sites:
It was held that the appellants were manufacturing complete compact units at sites prior to their installation without obtaining the necessary Central Excise licence and without observing prescribed formalities. These units included package chillers, water chilling machines, air handling units, and others. The Principal Collector concluded that this activity amounted to manufacturing at the sites, making the appellants liable to take out L4 licences and pay Central Excise duty (Para 90).

Failure to Inform the Department and Non-Production of Documents:
The appellants were found guilty of issuing bills for higher prices from their Head Office and not disclosing this fact to the department. This charge was established as per Para 91.

Clandestine Removal of Fully Manufactured Goods:
The Principal Collector established that the appellants had clandestinely removed fully manufactured goods without payment of duty. This charge was confirmed in Para 92 of the order.

Discrepancies in the Show Cause Notice:
The appellants contended that the Principal Collector did not address various discrepancies pointed out in the show cause notice. They argued that the Principal Collector merely stated that these discrepancies were not accepted without detailed examination. The Tribunal noted that the adjudicating authority had not discussed these discrepancies in detail and agreed that prima facie mistakes, duplication, and differences existed. The Tribunal directed that these discrepancies be re-examined in the interest of justice.

Permissible Deductions and Valuation of Goods:
The appellants argued that their invoices included excise duty, sales tax, and other taxes, along with post-manufacturing expenses like transport and insurance. The Principal Collector had observed that the appellants did not provide details of these expenses nor sought deductions. The Tribunal considered that permissible deductions under law, if eligible, should be considered and that this aspect was not adequately addressed by the adjudicating authority.

Conclusion:
The Tribunal found that the case involved several important issues of facts and law, and that the adjudicating authority had not fully addressed these issues. The Tribunal directed that the case be remanded back for de novo adjudication by the jurisdictional Collector of Central Excise. The adjudicating authority was instructed to consider the affidavits submitted by the appellants, re-examine the discrepancies, and determine the correct assessable value of the goods. The Tribunal emphasized the need for a detailed analysis of the processes undertaken at the sites and the determination of whether these processes amounted to manufacturing. The adjudicating authority was also directed to give the appellants an opportunity to be heard and to pass a speaking order observing the principles of natural justice.

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