Decided on December 08,2000



S.S.SEKHON - (1.)THE issue in this appeal relates to determination of the value under Section 4 of Central Excise Salt Act 1944 for the purpose of clearance of Transmission Shafts by the appellants to their other unit at Tiruvallur for captive consumption during the years 1989 -90 to 1992 -93.
(2.)Value for purposes of assessment of duty on such shafts (Model TT2221) was claimed on the basis of landed cost + 5% profit for the years 1989 -90 & 1990 -91 along with Costing Certificate and for the year 1991 -92 and 1992 -93, it was declared a budgeted cost and revised based on actual material cost and for Models CRT 533, CLBT 754, CLBT 5961 the values were claimed on budgeted cost plus notional profit and revised to actual material cost and for model CAT 966E, CATD 64 for the period 1992 -93 it was declared as cost of material manufactured/processed plus notional profit. The price lists for 1989 -90 & 1990 -91 was approved and 1992 -93 were investigated and a show cause notice was issued dated 11.3.1994, in respect of clearances for the period 1989 -90 to 1992 -93. Collector passed the present order, impugned in this appeal, confirmed the differential duty of Rs. 1,03,79,857.76 and imposed a penalty under rule 173Q of Rs. 50,000/ -. We have heard Learned Counsel Shri R. Raghavan for the appellants and Shri S. Kannan, Ld. DR for the Revenue and after considering the submissions find - -
(a) The show cause notice and the order determining the value are based on actual cost plus divisional profit as against the landed cost of finished product plus 50% profit basis adopted by the assessee.

(b) The appellants have resorted to 'Landed Cost' based on the basis of the order of Addl. Collector dated 21.11.1990 in their own case. As regards adopting budgeted cost, they explain it as previous years actuals and the dispute is not on costs but the quantum of profit there is to be added.

(c) The goods are being captively consumed and have to be valued as per Section 4(1)(b) read with the Central Excise Valuation Rules, 1975, rule 6b(i) or 6b(ii). Since no comparable goods prices available, 6b(ii) will be applicable, which prescribes 'profit, if any, which the assessee would have normally earned on the sale of such goods' to be added to the cost of production. Therefore, when the profit of the Corporate group as a whole i.e. M/s. Hindustan Motors, would not be applicable, but the Division at Hosur being the assessee, the profits of that Division would be relevant and applicable. If the division is making a profit, as arrived at by the adjudicator, and which is not being contested, and the profits are only for supply of such like goods, then we cannot find any fault with the valuation as arrived at. No material has been produced by the appellants of 'profits' to be other than what had been determined. Therefore, the values as arrived at are confirmed.

(d) We have given anxious thought to the appellants submissions of following an order of Additional Collector and also the material brought out in the grounds in appeal, that the issue of valuation dispute was well within the knowledge of the assessee and the department. Therefore, we cannot uphold the invoking of the larger period under proviso to Sec. 11A(1) of the Central Excise Act, 1944 in the facts of this case, more so, to effect a change by re -determining the profits and the grounds of demands. Therefore, we cannot find the need for visit of the penalty under rule 173Q on the assessee.

In view of our findings, we would therefore confirm the determination of the value as arrived at by the Collector and set aside the order as regards penalty and the determination of duty demand on Price Lists already approved and finalised by the AC. The demands on the Price Lists for 1992 -93 which were pending approval are confirmed, following Samrat International (P) Ltd., 1992 (58) ELT 561 (SC) :, 1991 (33) ECR 19 (SC). Appeal allowed partially in these terms.

(Pronounced in Court on 8.12.2000).

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.