2013 (11) TMI 234 - AT - Central Excise

Determination of assessable value adjustment of excess duty paid with short payment of duty in case of stock transfer - Waiver of Pre-deposit Held that - The applicant has determined the assessable value on stock transferred goods under Rule 8 of Central Excise Valuation Rules by adopting 110% of the cost of the product - the applicant has adopted the CAS-4 method - For the year 2005-2006 and 2007-2008, the difference in the assessable value was around 57.39 Lakhs and 36.71 Lakhs respectively in comparison to the value arrived at by the applicant, whereas for the years 2006-2007, 2008-2009 and 2009-2010, the applicant has paid duty on the excess value of Rs.3.13 crores, 2.3 crores and 3.03 crores respectively - Prima facie, there is no reason why the excess duty paid during 2006-07, 2008-09 & 2009-10 should not be adjusted for the period where duty has been short paid - the applicant could able to make out a prima facie case for total waiver of dues adjudged and accordingly all dues waived and its recovery stayed during the pendency of the appeal Stay granted.

Issues: Application for waiver of pre-deposit of duty and penalty under Section 11AC of CEA, 1944 based on the determination of assessable value on stock transferred goods under Central Excise Valuation Rules using CAS-4 method for the period 2005-2010.

Analysis:
1. The appellant, engaged in manufacturing excisable goods, sought waiver of pre-deposit of duty and penalty amounting to Rs.15,41,790/- under Section 11AC of CEA, 1944. The dispute arose from the determination of the assessable value on stock transferred parts to their sister concerns for the years 2005-2010. The appellant initially calculated the assessable value by adopting 110% of the cost of the product using the CAS-4 method. However, a CERA Audit revised the assessable value, leading to a demand of Rs.2,23,26,120/-. The Department then referred the matter to the Assistant Director (Cost) for further assessment based on CAS-4 method and overhead costs, resulting in discrepancies in the assessable value for different years.

2. The Ld. Company Secretary representing the appellant argued that there was an excess payment of duty during certain years due to the Department's revised assessable value being lower than the value at which duty was paid. The financial condition of the appellant was cited as a reason for seeking a waiver of the excess duty paid. The Ld. A.R. for the Revenue failed to provide a satisfactory explanation for the discrepancies in the assessable value for the years in question.

3. Upon hearing both parties and examining the records, the Tribunal observed that the issue revolved around the determination of assessable value on semi-finished Excavators transferred to sister concerns for further manufacture. While the appellant initially used the CAS-4 method for valuation, discrepancies were found by the CERA Audit. The Department recalculated the assessable value for the entire period with the assistance of the Assistant Director (Cost), leading to varying differences in assessable values for different years.

4. The Tribunal noted significant differences in the assessable values determined by the Department compared to the appellant's calculations for different years. Considering the excess duty paid by the appellant during certain years and the short payment during others, the Tribunal found a prima facie case for total waiver of dues adjudged. Consequently, the Tribunal granted the waiver and stayed the recovery of dues during the pendency of the appeal, allowing relief to the appellant.

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