CARBORUNDUM UNIVERSAL LTD. Vs. CCE

JUDGEMENT

(1.) THE appellants are engaged in the manufacture of grinding wheels, coated abrasives, etc. They also manufacture certain intermediate products such as alkyd resins, which are either consumed within the factory of production or cleared to sister units at other places for captive use in the manufacture of final products. During the period from 29.9.1999 to 3.8.2000, they removed a certain quantity of alkyd resin to their sister unit at Hosur on payment of duty. After investigations, the Department issued a show -cause notice dated 25.5.2001 demanding differential duty of Rs. 5,03,309/ - from them, by invoking the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act. The notice also proposed to levy interest on duty under Section 11AB and to impose penalties under Section 11AC and under Rule 173Q of the Central Excise Rules. The proposals in the show -cause notice were contested. The original authority confirmed the demand of duty to the extent of Rs. 4,96,591/ - against the party under Section 11A(1) [with interest thereon under Section 11AB] and imposed on them equal amount of penalty under Section 11AC of the Act. It also imposed a separate penalty of Rs. 50,000/ - under Rule 173Q. The assessee's appeal against this decision was rejected by the Commissioner (Appeals). Hence the present appeal.

(2.) AFTER examining the records and considering their submissions, we find that, though there is a feeble attempt in the memo of appeal to raise the issue of marketability of the product, no such issue has surfaced for consideration at the final hearing stage. The two main issues debated at the hearing stage are in relation to the valuation of the goods and the invocation of larger period of limitation. A major part of the period of dispute is prior to 1.7.2000, for which, admittedly, the goods required to be assessed in terms of Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975. From 1.7.2000, the assessment was to be made in terms of Rule 8 of the Central Excise Valuation Rules, 2000. It is alleged by the appellants that learned Commissioner (Appeals) ignored these provisions in the matter of determination of assessable value of the goods. It is submitted that marketing, selling and distribution expenses incurred in respect of the goods were not to be included in the assessable value under the said provisions, but the same were included by the lower authorities. The appellants further submit that the assessable value was determined without appreciating the assessee's submissions as to which were the elements entering into the "cost of production" relevant to the above Rules. Learned Commissioner (Appeals) did not give any conclusive finding on the extent of profit to be included in the assessable value. After reiterating these grievances of the assessee, learned Counsel submitted that the lower appellate authority ought to have followed CAS4 in the determination of assessable value for the entire period. In this connection reliance was placed on the Tribunal's decision in Tejo Engineering Services Pvt. Ltd. v. Commissioner , wherein a similar case was remanded to the original authority for fresh determination of assessable value in terms of CAS4.

(3.) IN this appeal, it is conceded that any declaration as required under Rule 173C was not filed by the assessee in respect of the subject goods, but it is contended that non -filing of declaration would not constitute suppression of facts for the purpose of the proviso to Section 11A(1) ibid and also would not invite any penalty. As the goods were cleared on payment of duty and as the details of the value of the goods were available on record, there could be no allegation of suppression with intent to evade payment of duty. Learned Counsel reiterated these averments and also submitted that any intent to evade payment of duty could not be attributed to the assessee inasmuch as any amount of duty paid by them on alkyd resin was available as Modvat credit to their sister unit at Hosur. In this connection, he claimed support from the Tribunal's larger Bench decision in Jay Yushin Ltd. v. Commissioner . Reliance was also placed on the following decisions: