1999 (11) TMI 352 - AT - Central Excise

Summary

Issues:
1. Valuation of goods for captive consumption.
2. Interpretation of Rule 173C under Central Excise Act, 1944.
3. Application of "ordinarily sold" concept in Central Excise Act.
4. Pre-deposit of duty requirement.
5. Remitting the proceedings back to the Commissioner.

Valuation of goods for captive consumption:
The case involved the manufacture of "Multilayer Plastic Laminated Web" by the appellants for captive consumption in their final product. A show cause notice was issued for the recovery of differential duty on these goods consumed during a specific period. The Assistant Collector confirmed the demand based on the market price available at the factory gate. The appellants contended that the prices indicated for free market sales should not automatically apply to captive consumption. The Tribunal found it necessary to reexamine the issue and remitted the proceedings back to the Commissioner for a well-reasoned decision on merits without insisting on pre-deposit of duty.

Interpretation of Rule 173C under Central Excise Act, 1944:
Prior to an amendment in Rule 173C, assessees were required to file price lists for approval before clearances. The amendment dispensed with the need for prior approval and made clearance documents the basis for price declaration. The appellants complied with the mandatory declarations for goods not sold in the free market or for captive consumption. The Tribunal highlighted the changes in the law due to the amendment and emphasized the importance of adhering to the new requirements.

Application of "ordinarily sold" concept in Central Excise Act:
The appellants argued that the goods, although sold to a buyer for specific testing purposes, did not fall under the category of "ordinarily sold" as per the Central Excise Act. However, the Tribunal rejected this argument, stating that the purposes for which goods are purchased do not affect the ordinary character of the sale. The Tribunal noted that the goods were mainly captively consumed by the assessee, with limited sales to buyers during a specific period, raising questions about the applicability of free market prices to captive consumption.

Pre-deposit of duty requirement:
The Commissioner (Appeals) had directed the assessees to pre-deposit the entire duty amount, which the appellants sought to modify. The Commissioner dismissed the appeal for non-compliance, leading to the present appeal. The Tribunal found the balance of convenience not entirely in favor of the department and allowed the appeal, remitting the proceedings back to the Commissioner for a detailed examination without insisting on pre-deposit.

Remitting the proceedings back to the Commissioner:
Given the complexity of the issues raised by the show cause notice, the Tribunal deemed it appropriate to remit the proceedings back to the Commissioner for a thorough examination. The Commissioner was instructed to allow the assessees to present their case and then issue a well-reasoned order on the merits of the case. The Tribunal emphasized the importance of a timely decision on the appeal and directed the assessees to cooperate in the process.