2003 (6) TMI 94 - AT - Central Excise

Tribunal upholds Revenue's demand under Section 11A, validly reopening assessments, emphasizing assessable value determination

The Tribunal ruled in favor of the Revenue, upholding the demand raised under Section 11A and emphasizing the use of the price of goods sold outside for ... Demand - Valuation (Central Excise) - Captive consumption Issues:1. Dispute over valuation of goods for captive consumption.2. Validity of the demand raised under Section 11A of the Central Excise Act, 1944.3. Reopening of assessment and sustainability of the show cause notice.Issue 1: Dispute over valuation of goods for captive consumption:The case involved a dispute regarding the valuation of M.S. Ingots manufactured and cleared for captive consumption. The respondents had declared different rates for goods cleared to their re-rolling mill and to outside buyers. The Revenue issued a Show Cause Notice demanding differential duty based on the value of goods sold to outside buyers. The respondents argued that the goods were meant for captive consumption, citing Rule 6(b)(ii) of the Central Excise (Valuation) Rules. The Commissioner (Appeals) accepted the assessee's contention, holding that the contractual price for goods sold outside the factory should not be adopted for goods captively consumed. The Tribunal noted that the value of goods sold outside should be used for arriving at the assessable value for goods consumed captively, setting aside the Commissioner's order.Issue 2: Validity of the demand raised under Section 11A:The Revenue contended that the value of goods sold outside should be adopted even for captive consumption, citing Rule 6(b)(ii) of the Central Excise Valuation Rules. The Tribunal referred to previous judgments where it was held that the price of goods sold in the market should be used for goods used for captive consumption. The Tribunal found that the assessments were reopened within the permissible time frame and sustained the demands raised under Section 11A, overturning the Commissioner's order.Issue 3: Reopening of assessment and sustainability of the show cause notice:The respondents argued that the show cause notice issued to reopen the assessment was not sustainable as the assessments had been finalized earlier. However, the Tribunal held that assessments can be reopened even after finalization as per the proviso to Section 11A. Relying on relevant judgments, the Tribunal found the demand for the period prior to the notice date to be sustainable. The Tribunal concluded that the Commissioner's order was not legally sound, as it misapplied the ruling in a previous case and set aside the order, allowing the Revenue's appeal.In conclusion, the Tribunal ruled in favor of the Revenue, upholding the demand raised under Section 11A and emphasizing the use of the price of goods sold outside for determining the assessable value of goods consumed captively. The Tribunal found the assessments were validly reopened and rejected the argument against the sustainability of the show cause notice.