2020 (2) TMI 180 - AT - Central Excise

Valuation - inclusion of amortization cost of the mould in the manufacturing cost of the finished goods viz. articles of plastic - whether the amortization cost of the moulds be added @ 0.66% as observed by the learned Commissioner (Appeals) or @ 1.75% to cost of manufacture of plastic articles? - HELD THAT - The said amortization percentage has been arrived at based on the Chartered Accountatn s certificate and no contrary evidence has been placed by the Revenue to rebut the said finding of the learned Commissioner (Appeals). Also, the amount involved in the present appeal if calculated taking the revised amortization cost of mould @ 1.75% would definitely be less than ₹ 50.00 lakhs, hence covered by the Litigation Policy Circular dated 22.08.2019. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Discrepancy in amortization cost calculation for manufacturing plastic goods.
2. Disagreement on the percentage of amortization cost to be included in the value of finished goods.
3. Appeal against the interest confirmed under Section 11AB of the Central Excise Act, 1944.

Analysis:
1. The appeal was filed by the Revenue against an order passed by the Commissioner of Central Excise (Appeals) regarding the inclusion of the cost of the mould in the manufacturing cost of plastic goods. The respondent failed to include the cost of the mould, leading to show-cause notices for recovering differential duty with interest. The Commissioner (Appeals) directed to include the amortization cost of the moulds at 0.66% in the value of finished goods, differing from the adjudicating authority's decision of 1.75%. The Revenue contended that the Commissioner erred in this direction and in setting aside the interest under Section 11AB of the Central Excise Act, 1944.

2. The Revenue argued for including the amortization cost at 1.75% instead of 0.66% as decided by the Commissioner (Appeals). The respondent, supported by a Chartered Accountant's certificate, justified the 0.66% amortization cost. The absence of contrary evidence from the Revenue to challenge this finding supported the Commissioner's decision. Even if the amortization cost was increased to 1.75%, the differential duty amount would not exceed a certain limit, falling within the Litigation Policy Circular's coverage. Moreover, since there was no suppression of facts, the recovery of interest under Section 11AB was rightly set aside by the Commissioner (Appeals).

3. The Tribunal considered the issue of the amortization cost percentage to be added to the manufacturing cost of plastic goods. The Commissioner (Appeals) had determined this percentage at 0.66% based on the Chartered Accountant's certificate. Given the lack of evidence from the Revenue to dispute this calculation and the amount falling within the policy limit, the Tribunal upheld the Commissioner's decision and dismissed the Revenue's appeal. The judgment emphasized the importance of evidence and calculation accuracy in determining duty amounts and interest recoveries under the Central Excise Act, 1944.