2014 (3) TMI 749 - AT - Central Excise

Clearance of goods at concessional rate of duty - SSI Exemption - Notification No. 09/2003-C.E. dated 01.3.2003 - Held that - appellants when they received the order for implementation of turn key projects had intimated the department and submitted the cost structure to the department. The assessable value of the transformers was determined as per CAS-4 by a qualified Chartered Accountant and this was submitted on 31.7.2004 to the officer in respect of his letter dated 22.4.2004. Nevertheless, show-cause notice was issued on 12.8.2005 invoking suppression and mis-declaration and proposing to revise the assessable value and demand of differential duty with interest and imposition of penalty as above. We find that what the department has done is to add the freight element from the factory gate to the sites in respect of transformers by invoking Rule 7 read with Rule 11 of the Central Excise Valuation Rules and also calculate the assessable value on the basis of transformer oil requirement indicated in the contract and adopt the one whichever is higher. There is no finding or evidence to show that actual quantum of oil used was higher than what was indicated in the CAS-4 and why the Chartered Accountant s certificate cannot be accepted. Important statutory aspects regarding limitation as well as reasons for inclusion of elements of cost have not been given and hence cannot be sustained. In these circumstances, we find that the Revenue has not made out a case for increasing the assessable value on the ground of suppression, mis-declaration or on merits - Decided in favour of assessee.

Summary

Issues:
Determination of assessable value for levy of duty on transformers under Central Excise Valuation Rules.

Analysis:
The appellants, manufacturers of Electricity Distribution Transformers, availed SSI benefits with Cenvat credit facility under Notification No. 09/2003-C.E. They informed the jurisdictional Range Officer about two turnkey projects and submitted cost structure sheets for 15 KVA and 25 KVA transformers. The Range Officer questioned the cost structure, leading to a statement by the appellant's Proprietor adjusting the cost. The Revenue calculated the assessable value based on Central Excise Valuation Rules, considering the transaction value for transformers cleared to work sites. They also noted discrepancies in the quantity of transformer oil used. The Revenue demanded differential duty, interest, and imposed penalties, which were upheld by the Commissioner (Appeals).

The Tribunal observed that the appellants had disclosed the cost structure to the department as per CAS-4, certified by a Chartered Accountant. However, the Revenue's method of determining assessable value by including freight element and oil quantity from the contract was questioned. The Tribunal found no evidence of excess oil usage or justification for not accepting the Chartered Accountant's certificate. It highlighted the lack of findings on why certain elements were included in the assessable value. The Tribunal concluded that the Revenue failed to establish grounds for increasing the assessable value based on suppression or mis-declaration. Therefore, the appeals were allowed, providing relief to the appellant.

In conclusion, the Tribunal's decision centered on the proper determination of assessable value for levy of duty on transformers under the Central Excise Valuation Rules. The Tribunal emphasized the importance of evidence and reasoning behind including elements in the assessable value, ultimately ruling in favor of the appellant due to the Revenue's failure to substantiate their claims.