2001 (9) TMI 357 - AT - Central Excise

Summary

Issues:
1. Inclusion of scrap value in assessable value for central excise duty.
2. Determination of fabrication rate per drum based on slab system.

Issue 1: Inclusion of scrap value in assessable value:
The appeal challenged an order by the Commissioner, Central Excise, regarding the assessable value of steel bitumen drums manufactured by the Appellants. The dispute centered on whether the value of scrap generated during manufacturing should be added to the assessable value. The Appellants argued that since they had already included the total cost of steel in the assessable value, the scrap value should not be additionally included. They relied on a previous order by the Collector of Central Excise, Kanpur, supporting their position. The Tribunal agreed with the Appellants, emphasizing that the Department was aware of their practice, and there was no wilful suppression to evade duty. Consequently, the demand for the scrap value was deemed unsustainable for the specified period.

Issue 2: Determination of fabrication rate per drum:
The second issue revolved around the choice of slab for calculating the fabrication rate per drum. The Commissioner applied a specific slab rate to determine the fabrication charges per drum, which the Appellants contested. They argued that the Commissioner erred by not considering a crucial letter containing provisions on fabrication rates and billing procedures. The Tribunal noted discrepancies in applying the rates and the method of calculating the number of drums supplied within a specific period. Despite the Appellants' failure to present all relevant materials before the Commissioner, the Tribunal granted them another opportunity to provide necessary evidence. The matter was remanded for fresh consideration, emphasizing the importance of following the prescribed procedures and determining the fabrication rate accurately based on the provided guidelines.

In conclusion, the Tribunal allowed the appeal, setting aside the Commissioner's decision on the fabrication rate and remanding the matter for further examination. The Appellants were directed to present all relevant materials to support their contentions, ensuring compliance with the established procedures for determining the fabrication rate per drum.