2004 (97) ECC 726 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

West Regional Bench -- Mumbai

Ms. Jyoti Balasundaram, Member (J) and Shri Moheb Ali M., Member (T)

Mazda Industrial Chemicals Pvt. Ltd.

Versus

Commissioner of Central Excise, Mumbai-IV

Appeals No. E/3392 & 3393/2003-Mum.

[Arising out of Order-in-Appeal No. SDK (2083-2084) 105-106/MI/2003 dt. 30.6.2003 passed by Commissioner of Central Excise (Appeals), Mumbai]

Order No. A/1402 to 1403/WZB/2004/C-I, dt. 24.8.2004, Certified on 8.9.2004

Valuation (C. Excise)

Assessable Value -- Slurry and Naphtha -- The assessee on cost construction basis arrive at assessable value which is neither accepted by the Department nor able to submit cost audit report, even at remand of the matter -- Hence, Commissioner's order of re-assessment is set aside -- Rule 6(b)(ii) of the Valuation Rules, 1975 r/w Sec. 4 of CE Act.

PRESENT :

Shri D.B. Shroff, Advocate for the appellant.

Shri S.V. Parelkar, JDR for the respondent.

Per : Moheb Ali M.

These appeals arose out of the order of Commissioner (Appeals) who in the impugned order set aside the order of the lower authority the assessable value of Slurry and Naphtha submitted by the assessee on cost construction basis during the period December 1988 to March 1991. While remanding the case back to the original authority he directed that a special audit be conducted by Assistant Director (cost) to arrive at the appropriate assessable value. The Commissioner (A) further directed that on receipt of such a report (Assistant Director Costs' report) provisional assessments be finalized and duty liability determined. This direction of the Commissioner is dated 23.10.2003. The matter pertained to April 1988 to June 90 in Appeal No. E/3393/03 and April 90 to July 91 in Appeal No. E/3392/03 before us.

2. In a nutshell the facts are as follows:

During the relevant time the appellants manufactured goods falling under Chapter heading 3402.90 and 3202.00. They had captively consumed products namely slurry and Naphtha manufactured by them in the production of their final product (OSA). They determined the value of these products under Rule 6(b)(ii) of the Valuation Rules, 1975 for the purpose of discharging duty as the goods were captively consumed. The price lists they filed in respect of these goods was supported by a Chartered Accountant's Certificate. It appears that the value was arrived at after taking the cost of raw material, overheads and notional profit which is in accordance with the Valuation Rules. These price lists were provisionally approved by raising the value arbitrarily by the Assistant Collectors against which they went in appeal to the Commissioner (Appeals) from time to time. The latter set aside all the provisional assessment orders and remanded the matter back to the Assistant Commissioner with directions that they be finally assessed. In the year 2002 the Dy. Commissioner took up the final assessments and approved the price lists filed on various dates. The Dy. Commissioner categorically held that no evidence was brought out to enhance the values. He did not speak of any report of Assistant Director (Cost) who seemed to have done cost audit of the products in question in the year 1991 (21.10.91). The Revenue was aggrieved by the order of the Dy. Commissioner and filed an appeal against it with the Commissioner (A).

2. The Commissioner (A) in the year 2003 passed the impugned order. In para 9 of his order the said Commissioner observes thus "The Department's appeal is restricted only on a singular finding in acceptance of the prices claimed by the appellant that Assistant Director (Cost) had conducted cost audit on 21.10.91 and had sent his report on 30.3.92 to the Divisional Assistant Commissioner wherein he had reworked out the cost of the product slurry and Naphtha and requested to examine the matter in detail and recover the duty under intimation to audit. The Department's appeal is that similar action should be taken for the other periods also, but the Dy. Commissioner has not taken cognizance of the cost audit report and summarily approved price lists finally at the prices claimed/declared therein by the Respondents".

3. From the records of the case it is observed that the appellants before us had been repeatedly asking for a copy of the report of the Assistant Director (Cost) in their letters dated 6.3.97, 28.12.2001 and 7.1.2002. No such report was furnished to the appellants. From a perusal of the Dy. Commissioner's order it is evident that he was not aware of any such report by the Assistant Dir. (Cost). He was therefore right of holding that he found no ground to reject the price lists filed by the appellant which were supported by Chartered Accountant's Certificates from time to time.

4. It is in this light the Commissioner's order remanding the matter as stated in para 1 of this order has to be seen.

5. Heard both sides.

6. After having set out the ground of the Department appeal as quoted hereinabove the Commissioner seems to be directing something which had not been pleaded before him by the Department. It would have been perhaps alright for the Commissioner (A) to direct the Dy. Commissioner to take into consideration the Assistant Director (Costs') report before finalizing the price lists if such a report ever existed. Instead he orders that another special audit should be conducted for a subsequent period by the Assistant Director (Cost) to arrive at the appropriate assessable value. He does so in the year 2003 whereas the issue pertained to the year 1988 to 1991. What earthly purpose such an audit serves we are unable to comprehend, particularly when the factory was closed and the Central Excise registration surrendered in 1999. The Commissioner (A) should have confined himself to the prayer of the Dept. instead of trading new grounds to remand the matter.

7. There are other issues also in the appeal before the Commissioner (A) such as computation of value of clearances and determination of value of final products as alleged in the show cause notices listed from Sr. No. VII to XIII in the order of the Dy. Commissioner. He did not deal with them in any manner.

8. In fine we observe that the order of the Commissioner (A) needs to be set aside for two reasons:

(a) The cost audit report dated 21.10.91 covered the period upto that point of time. All the show cause notices issued in regard to determination of prices of captively consumed goods except one, pertained to a period earlier to 21.10.91. No useful purpose will be served by conducting any cost audit for subsequent period, and

(b) If the Department's contention was right about the cost audit report for the relevant period the direction of the Commissioner (A) to the lower authority, should have been to take that report into consideration. Instead he directs another cost audit without giving any reason for doing so.

9. The order of the Commissioner is set aside. The appeal is allowed.

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