2015 (5) TMI 178 - AT - Central Excise

Tribunal overturns order on grey fabric valuation for Central Excise Duty, stresses need for evidence

Anita Prints Versus Commissioner of Central Excise, Mumbai-II

Anita Prints Versus Commissioner of Central Excise, Mumbai-II - 2015 (317) E.L.T. 257 (Tri. - Mumbai) Issues:Valuation of grey fabrics for Central Excise Duty - Inclusion of transportation and octroi charges in valuation.Analysis:The appeal was against the Order-in-Appeal regarding the valuation of grey fabrics processed on a job work basis. The lower authorities alleged that the appellant incorrectly valued the fabrics by not considering shrinkage and transportation charges. The Tribunal remanded the matter for reconsideration. Subsequently, the authorities dropped the proceedings on shrinkage but confirmed demands related to transportation and octroi charges. The appellant challenged this valuation in the Tribunal.Upon hearing both sides, the appellant argued that the demands based on transportation and octroi charges were unsubstantiated, emphasizing the lack of tangible evidence provided by the department. The appellant cited several judgments to support their claim. They contended that the valuation should be based on raw material cost and job working charges, as established by the Apex Court in Ujagar Prints. Additionally, they argued that since the demand was unjustified, no penalty should be imposed.The departmental representative defended the order, highlighting discrepancies in the Chartered Accountant's certificate and asserting that the demands were correctly confirmed as there was no evidence that the suppliers bore the transportation and octroi charges. After considering both arguments and examining the records, the Tribunal focused on the issue of undervaluation based on transportation and octroi charges.The Tribunal found merit in the appellant's submissions, noting that the show cause notice lacked specific evidence regarding the transportation and octroi charges paid by the appellant. Citing established law, the Tribunal emphasized that the department must provide tangible evidence when raising demands. The Tribunal also agreed with the appellant's argument that duty liability for job workers should be calculated based on raw material cost and job working charges, as supported by the Chartered Accountant's certificate following the precedent set by the Apex Court in Ujagar Prints.Consequently, the Tribunal concluded that the impugned order was unsustainable and set it aside, allowing the appeal with any consequential relief. The decision highlighted the necessity for concrete evidence in valuation disputes and reaffirmed the legal principles governing the assessment of duty liabilities for job workers.