Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2014 (7) TMI AT This

  • Login
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2014 (7) TMI 317 - AT - Central Excise


Issues:
1. Allegation of under-declaration of assessable value leading to short payment of central excise duty.
2. Calculation of value addition per metric tonne by the department.
3. Justification of duty demand based on cost construction method.
4. Lack of inquiry with customers and suppliers regarding pricing and raw material consumption.
5. Commissioner's finding on price as the sole consideration for sale.
6. Adjudication of the show cause notice and penalty imposition.

Issue 1 - Allegation of under-declaration of assessable value:
The appellant, a manufacturer of Alloy and Non-Alloy Round chargeable to central excise duty, was accused of under-declaring the assessable value of their products to minimize duty payment through PLA. The department alleged that the declared value was lower than the actual value addition, resulting in a shortfall in duty payment. A show cause notice was issued demanding the alleged short-paid duty amount along with interest and penalty under Section 11 AC.

Issue 2 - Calculation of value addition per metric tonne:
The department calculated the value addition per metric tonne by totaling expenses on various inputs and dividing it by the total quantity of rounds cleared. The department contended that the actual value addition based on the sale price was significantly lower than the calculated value addition, indicating under-declaration of assessable value by the appellant.

Issue 3 - Justification of duty demand based on cost construction method:
The appellant argued against the department's use of the cost construction method to determine duty liability, emphasizing that transaction value at the factory gate should be the assessable value unless specific conditions for cost construction method application are met. The Tribunal found the department's approach unjustified and unsustainable.

Issue 4 - Lack of inquiry with customers and suppliers:
No inquiry was conducted with the appellant's customers to verify pricing or with suppliers to investigate raw material consumption. The absence of market price analysis and raw material sourcing scrutiny undermined the department's allegation of under-valuation and raised doubts about the duty demand's validity.

Issue 5 - Commissioner's finding on price as the sole consideration for sale:
The Commissioner held that the appellant's declared assessable value was incorrect, suggesting that price was not the sole consideration for sale. However, the lack of clarity on additional considerations influencing pricing weakened this finding.

Issue 6 - Adjudication of the show cause notice and penalty imposition:
The Commissioner confirmed the duty demand, interest, and imposed a penalty on the appellant in the original order. The Tribunal, after considering arguments from both sides, found the department's basis for duty demand flawed and unsustainable. Consequently, the impugned order was set aside, and the appeal along with the stay application were allowed.

This detailed analysis of the judgment highlights the key issues raised, arguments presented, and the Tribunal's decision, providing a comprehensive overview of the legal proceedings and outcomes.

 

 

 

 

Quick Updates:Latest Updates