1999 (4) TMI 368 - AT - Central Excise

Summary

Issues Involved:
1. Correct assessable value of aluminium sheets.
2. Inclusion of excise duty paid on inputs in the assessable value.
3. Application of Modvat credit in determining assessable value.
4. Validity of show-cause notices and periods covered.
5. Applicability of legal precedents and departmental circulars.

Detailed Analysis:

1. Correct Assessable Value of Aluminium Sheets:
The primary issue was determining the correct assessable value of aluminium sheets manufactured on a job-work basis. The appellant argued that the assessable value should be based on the cost of raw materials plus job charges, excluding the excise duty paid on inputs, as per the Supreme Court's judgment in Ujagar Prints v. Union of India and Others. The Assistant Commissioner and Commissioner (Appeals) held that the excise duty paid on the raw material should be included in the assessable value.

2. Inclusion of Excise Duty Paid on Inputs in the Assessable Value:
The Assistant Commissioner approved the price lists by including the excise duty paid on raw materials in the assessable value of the final product. This decision was upheld by the Commissioner (Appeals), distinguishing the Larger Bench decision in Dai Ichi Karkaria v. Collector of Central Excise, Pune, which ruled that duty paid on inputs, for which Modvat credit is availed, is not includible in the assessable value of the final product.

3. Application of Modvat Credit in Determining Assessable Value:
The appellants contended that the Modvat credit taken on inputs reduces the landed cost of the inputs, and thus, the duty paid on inputs should not form part of the assessable value of the final product. The Tribunal, referring to the Larger Bench decision in Dai Ichi Karkaria, agreed with the appellants, stating that duty paid on inputs, for which Modvat credit is availed, should not be included in the assessable value of the final product.

4. Validity of Show-Cause Notices and Periods Covered:
Two show-cause notices were issued to the appellants for different periods. The appellants argued that part of the period covered by the second notice overlapped with the first, making it invalid. The Tribunal observed that this issue needed to be clarified by the proper officer, indicating that the second notice might be premature or time-barred.

5. Applicability of Legal Precedents and Departmental Circulars:
The Tribunal considered various legal precedents, including the Supreme Court's judgments in Ujagar Prints and Kirloskar Bros. Ltd., and the High Court judgments in Kamala Mills Ltd. and Mahendra Mills Ltd. The Tribunal concluded that these judgments were not directly relevant to the issue at hand. The Tribunal relied on the Larger Bench decision in Dai Ichi Karkaria, which directly addressed the issue of including duty paid on inputs in the assessable value when Modvat credit is availed.

Separate Judgments Delivered:
- Judgment by Member (J): The appeal was allowed, setting aside the impugned order and granting consequential relief to the appellants, based on the Larger Bench decision in Dai Ichi Karkaria.
- Judgment by Vice President: The matter was remanded to the Assistant Commissioner for de novo consideration, emphasizing the need to include the excise duty paid on inputs in the assessable value, in line with the Supreme Court's principles in Ujagar Prints and Kirloskar Bros. Ltd.
- Third Member's Opinion: Agreed with the Judicial Member, stating that the Larger Bench decision in Dai Ichi Karkaria was binding and directly applicable, leading to the appeal being allowed.

Final Order:
In view of the majority order, the impugned order was set aside, and the appeal was allowed with consequential relief to the appellants.