2000 (11) TMI 846 - AT - Central Excise

Summary

Issues:
1. Determination of assessable value of final product based on free supplied items by the Indian Railways.
2. Inclusion of interest on inputs in the assessable value of the finished product.
3. Discrepancy in the duty amount proposed in the show cause notice and confirmed by the Asstt. Commissioner.

Analysis:
1. The appellants, engaged in manufacturing PSC sleepers for the Indian Railways, faced a dispute regarding the inclusion of the value of free supplied items by the Railways in the assessable value of the final product. The disagreement centered on the appropriate value of the inputs to be added to the final product's value. The show cause notice alleged that the appellants incorrectly added the old value of HTS wire and MCI inserts in their price list, resulting in a demand for differential duty. The Asstt. Commissioner confirmed a duty demand based on the prevailing price of the raw material at the time of clearance of the finished product. However, the Commissioner (Appeals) remanded the case, directing the cost of inputs to be ascertained based on the raw material cost at the appellant's premises.

2. During the remand proceedings, the Asstt. Commissioner included interest on inputs, calculated from receipt to clearance of the final product, in the assessable value. This decision led to the confirmation of a higher duty demand against the appellant. The appellant challenged this inclusion of interest, arguing that it lacked legal support and justification. The Tribunal agreed with the appellant, stating that the inclusion of notional interest in the landed cost of raw materials was unwarranted and unsupported by law or precedent.

3. The appellant contested the discrepancy in the duty amount proposed in the show cause notice and the higher amount confirmed by the Asstt. Commissioner. The appellant argued that the confirmation of a duty demand exceeding the initial proposal was unjustified and beyond the scope of the show cause notice. The Tribunal concurred with the appellant, noting that the adjudicating authority had exceeded the show cause notice's scope without any amendments or fresh notices issued to the appellant. Consequently, the Tribunal set aside the impugned orders and remanded the matter to the Asstt. Commissioner for reevaluation of the duty demand, directing the adjustment of the deposited amount towards the confirmed duty quantum.