1998 (10) TMI 252 - AT - Central Excise

Summary

Issues:
- Determination of value of goods captively consumed

Analysis:
The judgment by the Appellate Tribunal CEGAT, New Delhi involved the determination of the value of goods captively consumed by M/s. Escorts Ltd. The goods in question were Hydraulic Gear Pump and Hydraulic Distributor Assembly used by the company in their Truck Division and also sold through their spare part division. The central issue was the demand for differential Central Excise duty due to the discrepancy in the assessable value of goods cleared to the Tractor Division compared to the value at which they were sold in the spare parts division. The Commissioners, Central Excise confirmed the duty demand based on Rule 6(a)(i) of the Central Excise (Valuation) Rules, 1975, and referred to the judgment in the case of Gwalior Rayon Mfg. Co. v. U.O.I. The appellants argued that the goods supplied to the Tractor Division were different from those sold in the market, emphasizing various differences in packaging, condition, and warranty.

The Appellate Tribunal considered both parties' submissions and analyzed the relevant provisions of Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975. The rule states that when excisable goods are not sold but used in manufacturing other articles, the value should be based on comparable goods produced by the assessee or another. The Tribunal rejected the appellants' argument that different prices could apply simultaneously, stating that as the goods were captively used, the provisions of Rule 6(b)(i) applied. The Tribunal noted that the Collector had found both types of goods to be the same in specification and quality, and any abatement on the value of goods sold should only consider the cost of packing, for which the appellants provided no data. The Tribunal concluded that the goods used captively were comparable to those sold in the market, and the differences in marketing process did not make them incomparable.

In addition, the Tribunal addressed the appellants' argument regarding the time-barred demand, stating that the demand under Section 11-A(1) of the Central Excise Act must be issued within six months from the relevant date. As the show cause notice was received within this timeframe, the Tribunal found no merit in the appellants' submission. Consequently, the Tribunal upheld the impugned orders and dismissed the appeals, affirming the duty demand for the goods captively consumed by M/s. Escorts Ltd.