1999 (1) TMI 335 - AT - Central Excise

Summary

Issues: Valuation of goods captively consumed for Excise Duty payment.

Analysis:
1. The issue at hand pertains to the valuation of goods captively consumed for the purpose of paying Excise Duty. The appellant had filed declarations disclosing the cost of production plus a notional profit of 10% to determine the assessable value. However, a show cause notice proposed a different approach, changing the profit percentage calculation based on the cost of production of the final product sold. The revised notice sought to add a margin of profit of 19.93% for 1993 and 27.71% for 1994, deviating from the initial method. The appellant argued that the profit percentage should reflect what would have been earned if the goods were sold in the market, as per Rule 6(b) of the Valuation Rules under Central Excise.

2. The appellant further contended that the valuation based on job work done in 1992 was flawed for several reasons. Firstly, the job work was carried out by a different agency, making it irrelevant. Secondly, the inputs used in 1992 differed from those substituted by the appellants when they began manufacturing the goods themselves. Additionally, the landed cost of inputs had changed due to a gradual decrease in customs import duties and international prices. Despite raising these points during the adjudication process, the original authority relied on the 1992 job work values, disregarding the appellant's arguments.

3. Moving to the appellate stage, the appellant raised concerns about the order-in-appeal not considering their written representations regarding the cost of production of a specific product. They argued that the failure to address these submissions violated principles of natural justice. Moreover, the issue of time bar was not adequately discussed in the order-in-appeal, indicating a procedural flaw. The appellate authority did not delve into whether the changes in the show cause notice constituted a fresh notice triggering limitation concerns.

4. Upon reviewing the submissions and records, the Appellate Tribunal found deficiencies in the order-in-appeal. The failure to address the time bar issue in detail and the lack of analysis regarding the changes in the duty demanded through the corrigendum rendered the order non-speaking. Consequently, the Tribunal set aside the order and remanded the matter to the original authority for a fresh consideration. The Assistant Commissioner was instructed to reevaluate the assessable value without relying on the outdated job work values from 1992 and to ensure compliance with Valuation Rule 6(b). Given the significant revenue involved and the pre-deposit made by the appellant, the Tribunal emphasized the need for expeditious resolution at the original authority level. The appeal succeeded on the grounds of remand for further proceedings.