2000 (1) TMI 234 - AT - Central Excise

Tribunal Upholds Excise Assessment, Dismisses Appeal Due to Suppression Allegations

The Tribunal dismissed the appeal, upholding the orders-in-original and the Order-in-Appeal. It affirmed the assessment based on Central Excise Valuation ... Valuation - Demand - Limitation Issues:- Dispute over assessable value of processed cotton fabrics- Application of Central Excise Valuation Rules- Allegation of suppression by the department- Jurisdiction of adjudication based on the period covered in show cause noticesAnalysis:1. The appeal revolves around the disagreement on the assessable value of processed cotton fabrics, with the department advocating for cost-plus valuation while the appellant argues for wholesale market price based on goods sold by the owners. The contention is whether Central Excise Valuation Rules or actual selling price should determine the assessable value.2. The appellant asserts that no suppression occurred as they provided both selling price and cost construction details. However, the department claims suppression due to undisclosed extra charges for processing the fabrics. The jurisdictional issue arises from the change in the law requiring suppression allegations to be made by the Commissioner of Central Excise, not a Deputy Commissioner.3. The department emphasizes that the goods processed by the appellant were not sold but processed on a job work basis, leading to excise duty liability. The application of Section 4(1)(a) is deemed inapplicable, necessitating the use of Customs Valuation Rules, particularly Rule 7 for best judgment assessment based on cost construction method.4. The Tribunal concludes that since there was no sale of goods by the appellant, Section 4(1)(a) is not applicable, and Section 4(1)(b) directs reliance on Valuation Rules for determining assessable value. Rule 7 is invoked for best judgment assessment, considering the unique nature of the processed fabrics and the absence of ascertainable normal prices.5. The issue of suppression is upheld based on the appellant's failure to disclose additional charges collected, leading to the department's justified allegation. The Tribunal clarifies that the adjudication by the Deputy Commissioner was valid as the law at the time did not restrict adjudication of suppression issues to a Collector of Central Excise.6. Regarding the last show cause notice, the Tribunal rejects the argument that the Commissioner should have issued it, as the period covered was within six months and did not invoke the extended period under Section 11A. The Superintendent's issuance and the Deputy Commissioner's adjudication of the notice are deemed legally sound.7. Ultimately, the Tribunal dismisses the appeal, finding no merit in the arguments presented, and upholds the orders-in-original and the Order-in-Appeal, affirming the assessment based on the Central Excise Valuation Rules and the allegations of suppression.