AI Drafter 
TaxTMI 
TaxTMI 
2007 (3) TMI 614
X X X X Extracts X X X X
X X X X Extracts X X X X
....posed on Appellant No. 1. 2. Brief facts of the case are that the Appellant No. 1 are engaged in the manufacture of S C Valves, Pressure Regulators, Head Lumps and parts thereof & Railway Clips and were availing Cenvat facility on the inputs used in the manufacture of finished products. For verification whether Brass Scrap generated in the factory of the Appellant was being substantially under-valued and removed on short payment of duty, their premises was visited by Central Excise Officers and relevant records were resumed for scrutiny. On scrutiny of Balance Sheets for the years 96-97 to 2000-01 and Inventory Summaries showing the position of their closing stocks it was noticed that the value per Kg. of Brass Scrap inclusive of excise duty was Rs. 98/- as on 31-3-99, Rs. 108/- as on 31-3-2000 and Rs. 95/- as on 31-3-2001. Whereas as per invoices the value of scrap cleared from the Appellant's factory was between Rs. 50/- to Rs. 65/- per Kg during the relevant period. On enquiry regarding price difference it was clarified by the authorized representative of the Appellant that Brass Scrap was not being sold in the market but sent for conversion into brass rods. In order to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d Rs. 108 per Kg in 2000 had no intrinsic worth and was divorced from the prevalent position in the market of Brass Scrap and brass rod. Hence it cannot be made the sole basis for the impugned demand. The fact is that as per invoices, the market rate of brass rod, exclusive of excise duty, in 1999 was Rs. 97/- per Kg and Rs. 109/- per Kg in 2000 which value is reflected in their relied upon balance sheets. (iii) That the Adjudicating authority overlooked the fact that the department referred to said to be invoices of M/s. Hindustan Wires Ltd. (which were not proved on record) but the value of Brass Scrap therein, said to be test study had not been adopted against them. The department had itself bidden goodbye to the invoices of M/s. Hindustan Wires Ltd. (iv) That the demand in the show cause notice has been worked out adopting the balance sheet value of closing stock of Brass Scrap (which was the same as value of brass rod in the balance sheet for the years 1998-99, 1999-2000, 2000-01) to be the value for the years 1997-98, 98-99, 1999-2000, 2000-2001 and 2001-2002 treating the balance sheet value to the cum-duty value of Brass Scrap/rod in the market ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d into brass rod on payment of job charges. For reasons of economy, they remove Brass Scrap from their factory for conversion into rods on payment of duty on the derivative value of Brass Scrap reduced from rates of brass rod in open market rate net of melting/burning loss, transportations charges, job charges payable to job workers, Brass Scrap dealers trading profit. They were entitled to these abatements. The rate at which they valued the Brass Scrap for job work in their invoices was net of these permissible abatements. (viii) That the valuation of Brass Scrap by them in their invoices raised on job workers is in tune with the valuation of Brass Scrap as done by M/s. Batra Valves who are also central excise licensee. The rates of Brass Scrap in market as published in Economic Times matches the rates at which they cleared for job work. The demand for the period preceding one year from 20-3-2002, the date of show cause is time barred as there is no suppression of fact pertaining to valuation. The full facts were in the knowledge of the department as there central excise records were audited by the audit teams from time to time and audit did not point out any irregularity in va....
X X X X Extracts X X X X
X X X X Extracts X X X X
....so proposed to apply the extended period under Section 11A of the Central Excise Act, 1944 on the grounds that Appellant No. 1 suppressed the very fact of their having determined the correct and reasonable value of the scrap as they never brought it to the notice of the department either by filing Balance Sheets along with supportive Inventory Summaries or by specific intimation or otherwise and mis-represented/mis-stated the facts by substantially under-valuing the mixed Brass Scrap and contravened the provisions of the Rules ibid. with the sole intention to short pay duty. I find that main ground for rejecting the assessable value of the said scrap shown in the invoices of the Appellant No. 1 was the value of Brass Scrap reflected in the balance sheets of the Appellant No. 1. The Appellant No. 1 have submitted that they had mentioned the higher prices of the said scrap in Inventory Summaries of Balance Sheets of relevant period due to wrong nomenclature used in the balance sheet as the prices were in respect of Brass Rods and not Brass Scrap. They submitted that they had shown wrong value of scrap in the balance sheet on the belief that the purchase price of Brass Rods was to be ....