2017 (1) TMI 491 - AT - Central Excise

Tribunal upholds Central Excise duty demand, drops penalty; dismisses appeal, clarifies assessable value determination

M/s. S. Kumar Ltd. Versus Commissioner of Service Tax And Commissioner of Service Tax Versus M/s. S. Kumar Ltd., M/s. S Kumar Synfab Ltd.

The Tribunal confirmed the demand against M/s. SKS for Central Excise duty payment but dropped the penalty. The demand against M/s. SKL was dismissed, and ... Valuation - Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975 or Rule 6(b)(ii) - price is not the sole consideration - allocation of expenses and inclusion of notional profit margin of 10% - processing of grey fabric - Held that: - during the relevant period, there was no statutory requirement or Board s guidelines regarding submission of CAS-4 Certificate. The standards were incorporated through the Circular dated 13.02.2003 of the Board for future guidelines. in the appellants own case for the subsequent period [2016 (6) TMI 716 - CESTAT NEW DELHI], identical issue came up before this Tribunal where The Original Authority held that the costing should have done only on actuals. However, while arriving at the figures for purported undervaluation the Revenue relied on Profit & Loss Account and Balance Sheet of second Respondent for cost of grey fabrics. Further, addition to the cost thus arrived was made towards freight, tax, insurance, commission, etc. again based on the said Balance Sheet. We find such exercise to arrive at assessable value for the impugned period is without any legal basis and arbitrary - valuation adopted and relied upon M/s. SKL is correct and in terms of law. Further, the issue which has attained finality in remand proceedings, cannot be reopened. Appeal partly allowed - partly decided in favor of appellant. Issues: Valuation of processed grey fabrics for payment of Central Excise duty, inclusion of notional profit margin, penalty imposition on M/s. SKS, demand confirmation against M/s. SKL, legality of expenses added in valuation, appeal by Revenue against dropping of demand, appeal by M/s. SKL against demand confirmation, appeal by M/s. SKS against penalty imposition.In the case concerning the valuation of processed grey fabrics for Central Excise duty payment, the dispute arose regarding the allocation of manufacturing expenses and other costs, resulting in a demand of duty against M/s. SKL and M/s. SKS. The appeals involved challenges against the demand and penalty imposition. The learned Commissioner (Appeals) had dropped the demand against M/s. SKL but confirmed it against M/s. SKS, which was subsequently remanded back to the Commissioner for denovo adjudication. The Tribunal had earlier set aside the penalty imposed on M/s. SKS. The Revenue appealed against the dropping of demand, while M/s. SKL appealed against the demand confirmation. The legal representative for the appellants argued that certain orders had attained finality and could not be challenged again. The case involved detailed submissions on the cost structure, market rates, and expenses included in the valuation process.Regarding the demand confirmed against M/s. SKL, it was argued that the cost calculations were based on prevailing market rates, and the expenses added were legitimate. The Tribunal referred to a previous judgment in the appellant's case, where a similar issue was settled in favor of the appellant. The Tribunal found no legal basis for the Revenue's additional valuation demands and dismissed the appeals. In another appeal, the Tribunal upheld the decision to drop the demand on account of notional profit margin against M/s. SKS, as it had attained finality and could not be reopened. Similarly, the Tribunal held that no penalty was imposable on M/s. SKS based on a previous order that had not been challenged further. Consequently, the appeals by the Revenue were dismissed, and the appeal by M/s. SKL was allowed.In conclusion, the Tribunal's detailed analysis focused on the legality of expenses included in the valuation, the finality of certain orders, and the application of relevant rules in determining the assessable value for Central Excise duty payment. The judgment provided clarity on the issues raised by the parties and upheld the decisions based on legal principles and precedents.