2000 (12) TMI 730 - AT - Central Excise

Summary

Issues:
1. Confirmation of demand of duty against the appellants for the period 1988-89 to 1992-93.
2. Allegations of wilful undervaluation of products to avail exemption.
3. Allegations of suppression of manufacture and clearance of split model air conditioners.
4. Denial of Modvat credit for inputs.
5. Imposition of penalty under Rule 173Q(1).

Analysis:

1. The appellants were manufacturing room air conditioners and availing exemption under Notification No. 75/87-C.E. The central excise officers suspected clandestine removal of products and seized records. A show cause notice was issued alleging wilful undervaluation to stay within exemption limits. Duty demands were confirmed, including penalties, by the Commissioner. The appellants challenged these demands, arguing that their prices were genuine and no undervaluation occurred. They maintained that prices remained consistent post-exemption, as duty was paid using Modvat credit.

2. The Commissioner confirmed duty demands for split air conditioners based on discrepancies in raw material purchase documents. The appellants explained that all air conditioners were classified similarly due to uniform duty rates. However, the Commissioner disregarded this explanation. The appellants contested the denial of Modvat credit for inputs, stating reversals were made at year-end for stock on hand.

3. The Tribunal found discrepancies in the appellants' pricing patterns over the years, indicating arbitrary billing practices. The Revenue's costing analysis was deemed appropriate due to the appellants' unreliable pricing data. Therefore, the duty demand of Rs. 13,80,426.50 was upheld.

4. Regarding split air conditioners, the Tribunal noted the lack of correlation between purchase and clearance documents. The appellants failed to explain this discrepancy satisfactorily, leading to the confirmation of duty demand of Rs. 2,44,440.00. The reversal of Rs. 1,69,956.00 for inputs upon opting out of Modvat credit was deemed necessary as per a previous Tribunal decision.

5. The Tribunal remanded the matter of denying Modvat credit of Rs. 4,04,443.77 back to the adjudicating authority for further review. The penalty of Rs. 2 lakhs was upheld as justified based on the case merits. In conclusion, the appeal was rejected except for the amount remanded for reconsideration.