2013 (5) TMI 515 - AT - Central Excise

Waiver of pre-deposit classification and valuation - manufacture of trailers which were purchased mainly by transport companies - duty paid chassis - benefit of Notification No.5/2006-CE dated 1.3.2006 - duty-paid in terms of heading 8706 - as per revenue as trailers were specifically classified under heading 8716 - Held that - Having found two serious infirmities in the adjudication of the cases, the impugned orders is set aside and direct de novo adjudication of the disputes. Accordingly, we set aside the impugned orders and allow these appeals by way of remand with a request to the Commissioner to pass speaking orders on all the relevant issues in accordance with law after giving the appellants reasonable opportunities of being personally heard. The assessees shall have to pre-deposit Rs.10,00,000/- each within eight weeks and report compliance to the Commissioner whereupon the latter will take up the case for de novo adjudication as above.

Issues:
1. Waiver of pre-deposit and stay of recovery sought by appellants.
2. Classification dispute regarding duty payment on final products.
3. Undervaluation of goods and errors in valuation assessment.

Analysis:

Issue 1: Waiver of pre-deposit and stay of recovery sought by appellants
The appellants, TEPL and TTIPL, sought waiver and stay in relation to the duty demanded and penalties imposed on them. The Tribunal decided that the appeals needed to be disposed of at the current stage. TTIPL had already paid Rs.10 lakhs, which was considered as partial pre-deposit. The Tribunal directed TTIPL to deposit a further Rs.10 lakhs, and TEPL was also instructed to make a similar deposit. These payments were to be made within a stipulated timeframe.

Issue 2: Classification dispute regarding duty payment on final products
TEPL and TTIPL were involved in the manufacture of trailers fitted to chassis supplied by customers. The appellants claimed duty exemption based on specific notifications, arguing that the process amounted to the manufacture of motor vehicles classified under heading 8704. However, the Additional Commissioner contended that trailers were classified under heading 8716 and were chargeable to duty. The Tribunal noted that the adjudicating authority did not consider the exemption claimed by the appellants in response to show-cause notices. It found that a classification dispute existed, which was not addressed by the authority, leading to an incorrect classification under heading 8716. The Tribunal directed a re-adjudication of the classification issue.

Issue 3: Undervaluation of goods and errors in valuation assessment
The records revealed undervaluation of goods in both cases. TTIPL argued that the value of axle assemblies was wrongly included in the assessable value of trailers without evidence of cost recovery from buyers. The Tribunal found that the valuation dispute was not properly examined by the adjudicating authority. It directed a re-adjudication of the valuation issues, emphasizing the need for a thorough assessment with proper consideration of documentary and oral evidence. The Tribunal set aside the impugned orders and instructed the Commissioner to pass detailed orders after re-examining all relevant issues, including classification and valuation, with the appellants given reasonable opportunities to present their case.

In conclusion, the Tribunal allowed the appeals by remanding the cases for de novo adjudication, highlighting the importance of addressing classification and valuation disputes accurately and fairly. The appellants were required to make specified pre-deposits before the cases could be re-examined by the Commissioner.

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