of Central Excise, Jaipur Vs. M/S. Scan Synthetics Ltd  Insc 311 (28 February 2008)
Bhan & J.M. Panchal
O R D
E R CIVIL APPEAL NO.4246 OF 2002 ASHOK BHAN, J.
appeal has been filed by the Revenue under Section 35L(b) of the Central Excise
Act, 1944 (for short, 'the Act') against the Final Order No.90/2002-A dated
27th February 2002 in Appeal No.E/881/2001-A passed by the Customs, Excise
& Gold (Control) Appellate Tribunal wherein and whereunder the Tribunal has
reversed the order-in- original of the Commissioner dated 02nd February 2001
and deciding the issue regarding determination of assessable value against the
Revenue in respect of intermediate product, i.e., the textured yarn
manufactured and consumed captively by the respondent in the manufacture of
final product, i.e., dyed yarn which is sold in the market.
stated, the facts of the case are:
respondent-assessee is engaged in the manufacture of textured yarn - grey yarn
as well as dyed falling under Chapter 54 of the first schedule to the Central
Excise Tariff Act 1985.
.... (Contd.) - 2 - As per Notification No.35/95-E dated 16.3.95, the product
dyed yarn was chargeable to 'NIL' rate of duty, if the same was manufactured
out of duty paid yarn. Subsequently, Notification No.34/97-E dated 6.6.97 was
issued wherein it was provided that the dyed yarn would be chargeable to Basic
Excise Duty (BED) and Additional Excise Duty (AED), if the same was
manufactured out of duty paid yarn.
to the Revenue the grey textured yarn is used captively in the manufacture of
dyed yarn and the assessee had undervalued the price of the grey textured yarn
by deducting certain amount claimed to be the dyeing charges from the price of
the textured dyed yarn in order to evade payment of duty.
A special audit of the records of the assessee pertaining to the financial
years 1994-95, 1995-96, 1996-97 and 1997-98 under Section 14A of the Act was
carried out for determining the value of the grey yarn in terms of Rule
6(b)(ii) of the Central Excise (Valuation) Rules 1975 ['the Rules']. As per the
cost audit report, assessee had misdeclared the value of the goods in question
and inflated the dyeing cost during the relevant period. Resultantly, show
cause notice dated 23rd February 2002 was issued to the assessee to show cause
as to why an amount of Rs.1,00,87,271/- (Rs.87,71,865/- as BED and
Rs.13,15,406/- as AED) towards short payment of duty be not recovered under the
provisions of sub-rule (2) of Rule 9 of Central Excise Rules, 1944 read with
Section 11A of the Act.
.... (Contd.) - 3 - The adjudicating authority, by the order in original dated 02nd February 2001 confirmed the demand. Aggrieved
against the said order, the respondent filed an appeal before the Tribunal
which was accepted by the impugned order.
Tribunal, by the impugned order, has held that the assessee was selling a
considerable portion of the product in question to independent purchasers at
the factory gate. The price charged by the assessee from the independent
purchasers/unrelated wholesale purchasers at the factory gate would be the
normal price of the grey yarn captively consumed by the assessee on the basis
of which assessable value of the product in question could be arrived at.
to the assessee, apart from procuring the grey textured yarn from the open
market, the assessee is also engaged in the manufacture of grey textured yarn
itself and is using it in the manufacture of its finished product, viz., dyed
yarn. It is also selling a portion of the grey textured yarn to unrelated
buyers in the open market at the factory gate. According to the assessee since
normal price in terms of Section 4(1)(a) of the Act was available in the form
of sale at the factory gate, the price of the goods consumed captively had to
be based on the sale price of the goods to unrelated buyers at the factory
question in the present case is whether the assessee had undervalued the
textured yarn consumed captively in the manufacture of dyed yarn.
.... (Contd.) - 4 - The assessable value of the captively consumed grey yarn
would be on the basis of the price at which the grey yarn was sold by the assessee
to unrelated buyers in wholesale at the factory gate. The assessee had produced
a number of invoices showing the sale to such independent buyers.
for the Revenue has not been able to point out any material on the record to
come to a conclusion other than the one arrived at by the Tribunal. The finding
recorded by the Tribunal is a finding of fact which cannot be interfered with.
appeal is accordingly dismissed. No costs.
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