1996 (3) TMI 274 - AT - Central Excise

Summary

Issues:
1. Differential duty on BWT-A type wagons and BCN type wagons.
2. Valuation of inputs supplied free of cost by the Railways.
3. Modvat credit eligibility under Rule 57G of the Central Excise Rules.
4. Method of calculating the differential duty on wagons.

Analysis:

Issue 1:
The case involves the demand for differential duty on BWT-A type wagons and BCN type wagons manufactured and cleared by the appellant. The dispute is focused on the period from 20-11-1986 to 15-11-1991. The Assistant Collector's order and subsequent appeal to the Collector (Appeals) form the basis of the current appeal before the Appellate Tribunal.

Issue 2:
The controversy revolves around the valuation of inputs supplied free of cost by the Railways for the manufacture of the wagons. The Assistant Collector added the cost of these inputs, including excise duty paid thereon, to the provisionally assessed value of the wagons. The appellant challenges this valuation method based on specific grounds related to the inclusion of duty elements in the value of inputs.

Issue 3:
The appellant did not initially claim Modvat benefit under Rule 57A of the Central Excise Rules for the inputs supplied by the Railways. The dispute arises from the non-observance of procedural requirements under Rule 57G, leading to a denial of Modvat credit eligibility by the lower authorities. The appellant contends that the right to avail Modvat credit should not be solely dependent on procedural formalities, citing precedents and special circumstances in the case.

Issue 4:
Regarding the method of calculating the differential duty, the Assistant Collector's approach of adding the value of inputs supplied by the Railways to determine the assessable value of the wagons is challenged. The Tribunal directs a proper assessment procedure to calculate the correct assessable value of the wagons and determine the duty payable based on the final assessable value, rather than a shortcut method. This direction aligns with established legal principles and precedents cited during the proceedings.

In conclusion, the Appellate Tribunal modifies the impugned orders to allow Modvat credit to the appellant, subject to verification by the Assistant Collector, and directs a proper assessment method for calculating the differential duty on the wagons. The jurisdictional Assistant Collector is tasked with quantifying the differential duty after due notice to the appellant, thereby partially allowing the appeal.