1998 (1) TMI 331 - AT - Central Excise

Summary

Issues: Duty amount confirmation, Penalty imposition, Interpretation of Tariff Heading, Limitation argument, Valuation based on proforma invoices, Reliance on price lists for valuation, Valuation of trailers manufactured on job work basis.

In this case, the Collector confirmed the duty amounting to Rs. 3,64,020.21 not paid on 135 trailers cleared by the appellants and imposed a penalty of Rs. 25,000. The first issue raised was regarding the interpretation of the Tariff Heading and CBEC letter, where the appellant argued that duty should not be levied on trailers designed to be drawn by tractors. However, the JDR contended that since the trailers were registered under the Motor Vehicles Act, duty was applicable regardless of the design for tractor use. The Tribunal found no merit in the appellant's argument, stating that the tariff entry did not specify duty exemption based on the method of trailer propulsion.

The second ground raised was the limitation argument, where the appellant claimed that since their trailer manufacturing activity was known to the department, the duty demand was time-barred. The Collector rejected this argument, emphasizing that once the appellant went out of excise control, the department's awareness of their activities did not affect the duty demand's validity. The Tribunal upheld this decision, stating that incomplete declarations and lack of bona fide belief in duty exemption did not support the limitation claim.

Regarding the valuation of the trailers, the appellant disputed the Collector's reliance on proforma invoices, alleging they were used for securing loans and did not reflect actual transaction values. The Tribunal agreed with the appellant, criticizing the Collector for not considering the approved price lists submitted by the appellants for valuation. The Tribunal directed the Collector to reevaluate the trailers' value based on the last approved price list, emphasizing the importance of using reliable sources for valuation.

Additionally, the valuation of trailers manufactured on a job work basis was discussed, with the appellant suggesting valuation based on materials supplied and job charges collected. However, the Tribunal found the materials supplied incomplete for valuation purposes, leading to the decision that the last approved price list should be the basis for valuation. Ultimately, the Tribunal set aside the Collector's order, remanding the case for reevaluation of value and duty, instructing the Collector to determine any penalty after providing the appellants with an opportunity to be heard.