1994 (7) TMI 198 - AT - Central Excise

Summary

Issues:
1. Whether Modvat credit of duty availed should be included in the assessable value of goods manufactured by the applicants.
2. Whether the demands are barred by limitation under Section 11A of the Central Excises and Salt Act, 1944.

Analysis:

Issue 1: Modvat Credit Inclusion in Assessable Value
The appellant argued that Modvat credit should not be added to the assessable value as they only perform job work and do not sell the goods to customers directly. They cited various decisions supporting their stance, including judgments by the Supreme Court, Tribunal, and High Court. The appellant also contended that demands are time-barred as they are beyond six months and the Department lacks grounds for invoking the longer period under Section 11A. The appellant highlighted previous audit objections and favorable decisions by the Collector (Appeals) in similar cases.

The respondent opposed the appellant's argument, stating that Modvat credit exclusion applies only if the applicants have opted into the scheme and followed the prescribed procedures. The respondent referred to established principles of valuation, emphasizing that the cost of raw material, job charges, and profit of processors should be included in the assessable value. Various case laws were cited to support this position, including judgments by the Supreme Court and Tribunal. The respondent argued that the present case involves assessable value at the hands of job workers, distinguishing it from previous cases.

The Tribunal considered both arguments and found that a detailed analysis of factual background and legal precedents was necessary to determine the applicability of the decisions cited. Consequently, the Tribunal directed the applicants to deposit 50% of the duty demanded in each case by a specified date, with the remaining amount and penalties waived upon compliance. The Tribunal scheduled a follow-up date to ensure compliance with the deposit requirement.

Issue 2: Limitation under Section 11A
The respondent pointed out that the applicants failed to disclose the elements of the costing of their product, indicating that the availing of Modvat credit was not in dispute based on the show cause notice and the Collector's order.

In conclusion, the Tribunal's decision balanced the arguments presented by both parties, requiring a partial pre-deposit by the applicants while dispensing with the remaining duty amount and penalties. The Tribunal allowed the applicants to make the pre-deposit through debiting RG 23A Pt. II and cash deposit if necessary.