2015 (11) TMI 462 - AT - Central Excise

Availment of CENVAT Credit - sale of finished goods lower than the price of inputs (raw material) - While clearing the said goods, they treated the same as waste of ferrous of iron and steel and classified the same under sub-heading 7204.90 and paid the duty accordingly - department is considering the goods removed by them as input cleared as such - Held that - the classification of the goods followed by the appellant is incorrect and is required to be rejected. The goods would be classifiable under the respective headings and would be chargeable to 15% duty as proposed in the show cause notice. Regarding valuation - When the goods were purchased by them, they were of bigger dimensions and the goods sold by them are of smaller dimensions and of varying sizes. In view of such position, such goods will fetch far less value compared to the goods purchased by them. The invoices of the goods sold by them are already available with the department and form part of the demand notice. We do not see any reason not to accept the value declared in such invoices. The Revenue has also not produced evidence that the appellant has collected any amount over and above the value declared in such invoices. In view of this position, the invoice value may be accepted and duty computed @ 15% on the declared value. Extended period of limitation - Held that - whole case was made based upon an information and after visit to the unit. From the declaration filed by the appellant, it is not possible to make out that what they were selling was small sizes angles and plates. In view of the said position, in our view, invoking the extended period was correct. - invoice value may be accepted, the duty liability will required to be recomputed by the adjudicating authority. Further, the interest and penal liability will also change - Matter remanded back - Decided partly in favour of assessee.

Summary

Issues: Classification and rate of duty, Value of goods, Extended period of limitation

Classification and Rate of Duty:
The case involved the classification and rate of duty for goods sold by the appellant, which were smaller remnant pieces of angles and plates left out during the manufacturing process of transmission line towers. The appellant treated these goods as waste and scrap, classifying them under sub-heading 7204.90 and paying duty accordingly. The department, however, proposed to classify these goods under the original heading of angles and plates, charging a 15% duty. The Additional Commissioner argued that based on Supreme Court decisions in LML Ltd. vs. CCE and CCE vs. Bhushan Steels and Strips Ltd., the goods could not be classified as waste and scrap. The Tribunal agreed, stating that the goods should be classified appropriately in their respective headings and charged a 15% duty as proposed.

Value of Goods:
Regarding the value of the goods, it was noted that the smaller pieces sold by the appellant were of lower value compared to the prime size angles and plates purchased. The Tribunal accepted the value declared in the invoices provided by the appellant, as the Revenue did not present evidence of any additional amounts collected by the appellant. Therefore, the duty was to be computed at 15% on the declared value of the goods.

Extended Period of Limitation:
The case invoked the extended period of limitation based on information and a visit to the appellant's unit by the Preventive Branch of the Central Excise Headquarters. The Tribunal found that the appellant's declaration did not clearly indicate that the goods sold were small sizes of angles and plates. Therefore, the invocation of the extended period was deemed correct. The appeal was allowed, remanding the case for recomputing the duty, interest, and penalty based on the accepted invoice value.

This judgment highlights the importance of correct classification of goods for duty purposes, the consideration of actual value in determining duty liability, and the justification for invoking the extended period of limitation based on the information available to the authorities.