1998 (9) TMI 242 - AT - Central Excise

Summary

Issues:
1. Appellant filed an appeal against confirmed demand by Collector, Central Excise.
2. Determination of assessable value on I.C. Engines.
3. Applicability of Valuation Rules - Rule 6(b)(i) and Rule 6(b)(ii).
4. Dispute over the addition of profit in assessable value.
5. Argument regarding profit margin and its application.
6. Amount deposited in PLA account covering the demanded duty.
7. Decision on waiver of pre-deposit under Section 35F of the Central Excise Act, 1944.

Analysis:
1. The appellant, a unit of Indian Railways, appealed against a demand confirmed by the Collector, Central Excise. The dispute pertained to the assessable value of I.C. Engines cleared during 1986-91.

2. The appellant proposed assessing the value based on the total cost of raw materials and manufacturing cost without adding any profit margin. However, the Asstt. Collector directed the addition of a 15% notional profit to the assessable value, leading to a demand for differential duty.

3. Both parties agreed that Rule 6(b)(i) was inapplicable, and Rule 6(b)(ii) applied. This rule allows for the addition of profit earned on the final product to determine the assessable value of the intermediate product.

4. The appellant argued that applying a 15% profit margin made on a small percentage of Locomotives to the majority cleared without profit was unjust. They proposed spreading the total profit earned over all cleared Locomotives, significantly reducing the differential liability.

5. The dispute centered on whether profit should be calculated based solely on actual sales or if a broader calculation method should be applied. The appellant's contention was that the profit should be spread over all cleared Locomotives, not just those sold with profit margins.

6. It was noted that a substantial amount had already been deposited in the PLA account, covering the demanded duty. Consequently, the tribunal found the appellant's case arguable and waived the requirement for further deposit.

7. Ultimately, the tribunal allowed the application, waiving the pre-deposit requirement or any part of the demanded amount, considering the amount already deposited and the arguable nature of the case presented by the appellant.