2011 (3) TMI 1176 - AT - Central Excise

Tribunal upholds best judgment assessment over lack of records post-factory closure

The Tribunal held that the best judgement assessment by the adjudicating authority was appropriate as the appellant lacked records post-factory closure, ... Best judgement assessment - Assessee opted for provisional assessment as they have to claim rebate on account of post manufacturing expenses on goods i.e freight and insurance and rebatement was allowed to the appellant on the basis of data provided to the adjudicating authority - whether the order passed by the adjudicating authority on the basis of best judgement assessment is correct or not? - Held that:- As appellant submitted that their factory has been sold out and they have no records and sought best judgement assessment by the adjudicating authority, adjudicating authority had finalised the assessment on the basis of best judgement assessment as confessed by the Rule 173(I) of Central Excise Rules. DR failed to produce any records for the assessment for the impugned period. Thus the adjudicating authority has applied its mind judiciously by finalising the assessment on the basis of best judgement and the same has been admitted by the appellant. Issues:1. Correctness of the best judgement assessment order by the adjudicating authority.Analysis:The appellant, a toothpaste manufacturer, appealed against an order where the lower appellate authority questioned the best judgement assessment method used by the appellant due to the availability of actual expenditure records. The appellant opted for provisional assessment from 1984 to 1986 and requested final assessment for 1987 to 1993, but due to factory closure in 1993, records were unavailable. The adjudicating authority finalized the assessment using best judgement, allowing some rebate. The Revenue appealed, arguing for rebate entitlement based on documents. The issue revolved around whether the best judgement assessment was appropriate given the lack of records post-factory closure.The appellant contended that since the factory was sold in 1993 with no available records, best judgement assessment was justified. The lower appellate authority's decision was deemed misconceived. The Departmental Representative argued for rebate entitlement based on documents citing relevant case law. The Tribunal considered both arguments and noted the critical issue of whether the best judgement assessment was correctly applied. The Tribunal found that the lower appellate authority's decision was irrelevant as the appellant lacked records post-factory closure, justifying the best judgement assessment under Rule 173(I) of the Central Excise Rules, 1944.The Tribunal emphasized that the lower appellate authority's reliance on precedents with ascertainable values from available records was misplaced, as the appellant had no such records post-factory closure. The adjudicating authority's use of best judgement assessment was deemed appropriate and acknowledged by the appellant. The Tribunal rejected the Departmental Representative's argument, stating it would render Rule 173(1) redundant if accepted. Consequently, the impugned order was set aside, and the original adjudication order was reinstated, allowing the appeal with any consequential relief.