1998 (4) TMI 211 - AT - Central Excise

Summary

Issues:
1. Challenge to the demand of Central Excise duty based on misdeclaration of manufacturing cost for television sets.
2. Dispute over the proper costing of TV sets to determine if the price exceeded Rs. 5,000.
3. Allegations regarding the costing of various components and inputs, including labor, by the department.
4. Argument on the applicability of valuation rules when the price under Section 4(1)(a) is available.
5. Comparison with a prior case regarding the inclusion of elements like advertising costs in determining the cost of TV sets.

Analysis:
1. The appeal contested the Additional Collector's order demanding Central Excise duty from the appellant for allegedly misdeclaring the cost of manufacturing television sets to benefit from a lower duty rate. The appellant declared the cost as Rs. 4,950 to avail an exemption notification, but the department claimed evasion by misdeclaration.

2. The appellant's counsel argued that the department did not justify the increased cost of components, including labor, used in manufacturing TV sets. Even if the department's costing was accepted, there was no evidence of selling the TV sets above Rs. 5,000, as declared in the price list approved by the Assistant Collector. The counsel contended that resorting to valuation rules was unnecessary when the price was available under Section 4(1)(a).

3. The department, represented by the SDR, referred to the show cause notice detailing the costing of components and labor, calculated by the department's cost accounts officer. The department argued that the appellant failed to provide the correct cost if they disagreed with the department's formula, suggesting the appeal's dismissal.

4. The Tribunal noted a similar case where the dispute revolved around the proper costing of TV sets to determine if the price exceeded Rs. 5,000. In that case, certain elements like advertising costs were contested for inclusion in the cost calculation. The Tribunal held that such elements should not be added to determine the cost, emphasizing that the department could not enhance the assessable value without challenging the price's genuineness.

5. The Tribunal applied the reasoning from the prior case to the present situation, highlighting that even if the cost of components exceeded Rs. 5,000, the manufacturer could still sell the TV sets below that price, benefiting from reduced duty. As there was no evidence of the appellant receiving a higher price than declared, the impugned order was set aside, and the appeal was allowed.