Captive clearance valuation on cost construction basis required fresh verification of conflicting cost evidence and remand.

Captive clearances to a sister concern were to be valued on a cost-construction basis under the applicable valuation rules, but the adjudicating authority proceeded ex parte and the valuation adopted was challenged. A cost accountant's certificate produced before the Commissioner (Appeals) contained figures that did not match data earlier furnished during investigation, so the additional evidence required proper verification against the departmental record. The appellate order was therefore unsustainable without fresh examination of the evidence and a reasonable opportunity of hearing, and the matter was remanded to the adjudicating authority for de novo decision.

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Issues: Whether the demand could be sustained on the basis of the valuation adopted by the adjudicating authority, and whether the matter required remand in view of the cost accountant's certificate produced before the Commissioner (Appeals).

Analysis: The duty dispute related to captive clearances to a sister concern, where valuation was to be determined on the cost construction basis under the applicable valuation rules. The adjudicating authority had proceeded ex parte. Before the Commissioner (Appeals), the respondents produced a cost accountant's certificate, but the figures therein were not consistent with the data earlier furnished to the department during investigation. Since the additional evidence was material and its consistency with the departmental record required proper verification, the appellate order could not stand without fresh examination of the evidence and opportunity to the respondents.

Conclusion: The impugned order was set aside and the matter was remanded to the adjudicating authority for fresh decision after considering the evidence and granting a reasonable opportunity of hearing.

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