1997 (3) TMI 210 - AT - Central Excise

Summary

Issues:
Valuation of goods under Central Excise Valuation Rules, 1975 - Allegations of misdeclaration of assessable value - Application of Rule 6(b)(i) and Rule 6(b)(ii) - Suppression of actual costing - Imposition of penalty and interest under Central Excise Act.

Analysis:

Valuation of Goods under Central Excise Valuation Rules:
The case involved the valuation of miscellaneous edible preparations manufactured by the appellant under a loan license agreement. The department alleged misdeclaration of assessable value by deducting margin from production costs. The appellant argued that valuation should be done under Rule 6(b)(i) of the Central Excise Valuation Rules, considering the goods as samples not sold. The Trade Notice dated 30th April, 1985, was relied upon to support the pro rata margin claimed for different pack sizes.

Allegations of Misdeclaration and Suppression:
The department contended that the appellant misdeclared the assessable value by deducting margin from production costs, contrary to the Central Excise Rules. The show cause notice invoked Section 11 A of the Central Excise Act, alleging suppression of actual costing. The appellant defended by stating that comparable prices were available, and there was no suppression. The adjudicating authority confirmed the demand and imposed duty and penalty, leading to the appeal.

Application of Rule 6(b)(i) and Rule 6(b)(ii):
The appellant argued that Rule 6(b)(i) should apply for valuation, while the department advocated for the application of Rule 6(b)(ii) in the absence of comparable goods' value. The appellant's reliance on approved price lists and RT 12 returns, along with the Trade Notice, supported the contention that Rule 6(b)(i) was applicable. The judgment emphasized that correct valuation had been brought to the department's notice, negating the claim of suppression, leading to the setting aside of the impugned order.

Imposition of Penalty and Interest under Central Excise Act:
The order-in-original had confirmed the demand, imposed duty, penalty, and interest under various provisions of the Central Excise Act. However, the appellate tribunal allowed the appeal, indicating that the appellant's case was to be accepted under Rule 6(b)(i) of the Valuation Rules. The judgment highlighted that the appellant's actions did not amount to suppression, leading to the decision to set aside the order and provide consequential relief if necessary.