Assessable value under central excise must be re-quantified when relevant invoices are already in departmental possession.

Assessable value under central excise was required to be reworked where invoices and records needed to determine the value of bought-out monitors were already in departmental possession. The assessee could not be faulted for not producing documents withheld by the department, and the lower authorities' refusal to allow deduction on that basis was inconsistent with natural justice. The duty was therefore re-quantified on the available record, with treatment of realisation as cum-duty price and adjustment of amounts already paid. Penalties were found excessive in view of the reduced duty liability and were retained only in modified form.

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Issues: (i) Whether the duty demand was required to be re-quantified by giving deduction for the value of bought-out monitors and by treating the realisation as cum-duty price; (ii) whether the penalties imposed on the appellants were sustainable and, if so, to what extent.

Issue (i): Whether the duty demand was required to be re-quantified by giving deduction for the value of bought-out monitors and by treating the realisation as cum-duty price.

Analysis: The duty liability was not in dispute, but the controversy was confined to the correct assessable value. The appellants had consistently sought the relied-upon purchase and sales invoices to establish the value of monitors supplied with the computers. The records indicated that such invoices had been resumed by the department, yet the lower authorities placed the burden on the appellants to produce documents already within departmental possession. That approach was found to be incorrect and violative of natural justice. In the absence of complete records being made available, the appellants' working of the duty liability was accepted.

Conclusion: The duty was confirmed at the reduced figures of Rs.79,079/- in one case and Rs.78,721/- in the other, with adjustment of amounts already paid.

Issue (ii): Whether the penalties imposed on the appellants were sustainable and, if so, to what extent.

Analysis: The goods were cleared without preparing invoices or discharging duty, attracting penal consequences under the erstwhile central excise regime. However, in view of the reduced duty liability and the surrounding facts, the originally imposed penalties were considered excessive and were scaled down.

Conclusion: Penalty under Rule 173Q was upheld in principle, but reduced to Rs.25,000/- each.

Final Conclusion: The appeals were allowed only to the extent of reworking the duty and substantially reducing the penalties, while sustaining liability to duty, interest, and penalty in modified form.

Ratio Decidendi: Where relevant invoices and records needed to determine assessable value are in the department's possession, the assessee cannot be burdened with producing them, and the duty must be re-quantified on the available record with appropriate reduction for bought-out items and cum-duty treatment.

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