2004 (12) TMI 227 - AT - Central Excise

Tribunal upholds PSC pipes valuation, deems duty demand time-barred, sets aside penalties, rejects premature duty demand on escalation charges.

The Tribunal upheld the valuation of PSC pipes based on the best judgment method and data rates from KUWSDB. The demand for duty on undervaluation was ... Demand - Valuation (Central Excise) - Undervaluation Issues:Valuation of PSC pipes supplied to KUWSDB, Differential duty on escalation cost awarded by KUWSDBValuation of PSC Pipes:The appeals were filed against the Order-in-Original related to the valuation of PSC pipes supplied to KUWSDB. The contract included not only supply but also laying, joining, commissioning, testing, and maintenance of the pipeline. The Commissioner determined the value based on Section 4(1)(b) and Rule 7 of the Valuation Rules, considering the data rate from KUWSDB. The Commissioner's decision relied on a Tribunal ruling regarding post-manufacturing activities' costs. The appellants challenged the valuation, citing various grounds such as confidentiality of documents, comparability of costs, and reliance on Chartered Accountant's certificate. The Tribunal upheld the Commissioner's valuation method, considering the scientific basis of data rates and rejecting the appellants' contentions.Time-Barred Demand and Penalties:The show cause notice covered a period from 1995 to 1999, with the Chartered Accountant's Certificate submitted in 1995. The Tribunal found the demand for duty during this period time-barred due to the Department's inaction and proper compliance by the appellants. Penalties under Section 11AC and Rule 173Q were set aside. The penalty on the Managing Director was also revoked as there was no justification for penalizing him.Escalation Charges:Regarding escalation charges, the appellant disputed the demand, stating it was premature as the escalation had not been finalized or received. The Tribunal agreed, setting aside the demand for duty on escalation charges. Citing relevant case laws, the Tribunal emphasized that duty can only be demanded on amounts actually realized by the appellant.Conclusion:The Tribunal upheld the valuation of PSC pipes based on the best judgment method and data rates from KUWSDB. It deemed the demand for duty on undervaluation time-barred and set aside penalties. The demand for duty on escalation charges was also rejected as premature. The appeals were disposed of accordingly.