1999 (9) TMI 304 - AT - Central Excise

Summary

Issues involved:
1. Whether the cost of mill wrapping paper was included in the final products' assessable value when cleared on duty.
2. Whether additional evidence regarding the inclusion of mill wrapping paper cost is admissible.
3. Interpretation of Notification No. 217/86 and Explanation (iii) in relation to the inclusion of input costs in the final product's value.
4. Applicability of formulas and standards in determining the inclusion of wrapping paper cost.
5. Allegations of suppression of information and manipulation of actual GSM of final products.
6. Whether the demand is hit by limitation.
7. Consideration of new evidence and remand for de novo re-consideration.

Detailed Analysis:
1. The primary issue in this case revolves around whether the cost of mill wrapping paper was correctly included in the assessable value of the final products cleared on duty. The appellants claimed that the mill wrapping paper cost was part of the final product's value, citing Explanation (iii) to Notification No. 217/86. The dispute centered on the inclusion of this cost in the duty payment clearance documents.

2. The appellate tribunal allowed the appellants to submit additional evidence through affidavits to support their claim regarding the inclusion of mill wrapping paper cost. These affidavits were based on earlier Cost Audits conducted by the deponents, emphasizing that the cost of wrapping paper was always included in the final product's value. The tribunal deemed this additional evidence crucial for a just decision.

3. The interpretation of Notification No. 217/86 and Explanation (iii) was pivotal in determining whether the input costs, including mill wrapping paper, should be considered in the final product's assessable value. The tribunal focused on the specific language of the Notification and the relevance of input costs as per the statutory provisions.

4. The discussion also delved into the applicability of formulas and standards in assessing the inclusion of wrapping paper cost. The appellants argued that the formula used by the paper trade should be considered, while the Revenue referenced ISI standards. The tribunal analyzed these arguments to ascertain the appropriate method for determining the inclusion of wrapping paper cost.

5. Allegations of suppression of information and manipulation of actual GSM of final products were raised during the proceedings. The tribunal considered whether the appellants had taken unfair advantage of the tolerance available under the scheme by manipulating the declared GSM of the final products.

6. The issue of whether the demand was barred by limitation was also addressed. While the appellants acknowledged the limitation aspect, they emphasized the importance of settling the matter on its merits. The tribunal examined the applicability of limitation in the context of the demand raised in the impugned order.

7. Following the consideration of the new evidence and its significance in contradicting the show-cause notice allegations, the tribunal set aside the impugned order and remanded the matter for de novo re-consideration. The tribunal emphasized the essential nature of the additional evidence in determining the inclusion of mill wrapping paper cost and directed the original authority to re-examine the case considering these evidences.

In conclusion, the judgment focused on the inclusion of mill wrapping paper cost in the final product's assessable value, admissibility of additional evidence, interpretation of relevant notifications, applicability of formulas, allegations of suppression and manipulation, limitation aspects, and the necessity for a fair consideration based on new evidence, leading to the decision to remand the case for further review.