Customs, Excise and Gold Tribunal - Calcutta
Alstom Limited vs Cce on 7 July, 2003
Equivalent citations: 2003(157)ELT462(TRI-KOLKATA)
ORDER
Archana Wadhwa (J), Member
1. After dispensing with the predeposit of duty and penalty amount, we take up the appeal itself, with the consent of both the sides.
2. The appellants are engaged in the manufacture of Vacuum Interruptor Tubes and Vacuum Circuit Breakers in their factory situated at Salt Lake. Apart from the above factory, the appellants also have six other units situated at different places and engaged in the manufacture of different items. The goods produced at the appellant's Salt Lake factory 9appellants herein) are being cleared by them to their sister concerns situated at Allahabad and Taratala, Kolkata Unit. The dispute in the present appeal relates to valuation of the goods being manufactured by the appellants and sent to their sister concerns.
3. Shri S.K. Bagaria, learned Advocate for the appellants submits that while arriving at the assessable value of the above goods being manufactured by them in terms of the provisions of Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975. The appellants have taken into account the entire cost of the raw materials, manufacturing cost including the administrative cost and overhead expenses and margin of profit. The above assessable value so declared by them was being accepted by the Revenue and they were paying duty on the basis of the same. However, they were issued a show cause notice on 28.1.2002 raising demand of duty of Rs. 2,18,93,152.00 (Rupees two crore eighteen lakh ninety-three thousand one hundred and fifty-two) for the periods -1998-99 and 1999-2000, on the alleged ground that the appellants were required to take into account the administrative cost, interest and profit etc. elements as reflected in their Balance Sheet for the relevant periods for arriving at the assessable value of the product. Shri Bagaria, learned Advocate submits that while taking the said administrative cost, the show cause notice has referred to the figures as reflected in their Balance Sheet of the company, which is for all the seven units for other business being undertaken by the company. He submits that in reply to the show cause notice, the appellants placed on record Chartered Accountants' Certificate and clarified that the assessable value of their product has been arrived at after taking into consideration the manufacturing cost representing factory overheads comprising administrative cost, depreciation, establishment cost, maintenance cost, indirect materials and all other production related costs of the Salt Lake Unit; They also submitted in the said reply that show cause notice wrongly proposed to enhance the value based on the Profit and Loss Accounts appearing in the Annual Report of the Company, which pertains to all the manufacturing units of the Company manufacturing different varieties of goods and having different manufacturing costs, overhead expenses etc. The clarified that it is the actual overhead expenses of the present unit which are to be taken into consideration and not the average percentage of the different elements of the Company, as reflected in their Profit and Loss Accounts. Ht submits that the arguments were also advanced on the point of limitation as also on the ground that the appellants' sister concern is availing the benefit of MODVAT Credit of Duty paid by them on the goods in question and as such, there cannot be any motive for undervaluation of the goods and the entire duty is revenue-neutral.
4. Shri Bagaria, learned Advocate also draws our attention to the various judgernents of the Tribunal laying down that while arriving at the assessable value of a particular product in terms of the provisions of Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975 - the expenses pertaining to the unit manufacturing that product, are only required to be taken into consideration and the expenses incurred by the other units or the profit made by the other units, are irrelevant for the said purposes. In this connection, he draws our altention to the Larger Bench decision of the Tribunal in the case of Raymonds Ltd. vs. Commissioner of C.Ex., Aurangabad reported in 2001 (45) RLT 911 (CEGAT-LB)=RLT (LB-CEGAT)-2069=2001 (129) ELT 327 (Tribunal-LB); in the case of Standard Industries Ltd. vs. Commissioner of Central Exerse, Bhopal reported in 2000 (120) ELT 111 (Tribunal); as also in the case of Hero Honda Motors Ltd. vs. Commissioner of Central Excise, Delhi reported in 2002 (147) ELT 620 (Tri.-Del.). Shri Bagaria, learned Advocate, also submits that the above decisions were placed before the Commissioner, but he has not considered the same.
5. Countering the arguments, Shri N.K. Mishra, learned J.D.R. for the Revenue supports the Order of the Commissioner and reiterates the reasoning.
6. We have heard the submissions made from both sides. We are of the View that the law is very clear and it is the overall expenses of the factory manufacturing the product, which have been taken into consideration while arriving at the assessable value of the captively consumed product and not the expenses as reflected in the Balance Sheet of the company as a whole, which means that other units expenses are not required to be taken into consideration. We do not find any discussion on the above point, though the same was taken before him and the attention was also drawn to the various decisions including the Larger Bench decision of the Tribunal. As such we are of the view that the laws as settled by the above-referred decisions, is required to be applied to the facts of the case and the matter is required to be re-adjudicated by the Commissioner after following the ratio of the said decisions. With this observation, we set aside the impugned order and remand the matte r to the Commissioner for de novo adjudication. However, we make it clear that the plea of duty being revenue-neutral of the point of limitation is being left open by us and the assessee is at liberty to agitate the same before the Commissioner during the de novo proceedings. At this stage, our attention has been drawn by Shri Bagaria, to the Circular No. 692/8/2002-CX dated 13.2.2003 [reported in 2003 (54) RLT M95 ] issued by the Central Board of Excise and Customs, New Delhi, vide which the guidelines given by the Institute of Cost & Works Accountant of India for arriving at the assessable value of the captively consumed items on capacity determination, overheads & cost of production, have been accepted to be proper guidelines and it has been clarified that the cost of production of captively consumed goods will henceforth be done strictly in accordance with the said guidelines. We direct the Commissioner to examine the applicability of the said Circular during de novo adjudication and apply the same accordingly, to the present proceedings. The appeal is thus allowed by way of remand. Stay Petition also gets disposed of.
7. Dictated in the open Court.