ORDER
G.A. Brahma Deva, Member (T)
1. After hearing for some time with reference to the stay petitions filed by the party, we find that the matter itself can be disposed of on limited issue. Accordingly the appeals were taken together for hearing with consent of both the sides.
2. The appellants, M/s Karnataka Cement Pipe Factory, are manufacturers of PSC Pipes falling under Chapter Sub-heading 6807.90 of the Central Excise Tariff Act, 1985 and are availing SSI exemption under relevant Notifications.
3. Shri Prakash Shah, learned Advocate appearing for the appellants submitted that the main dispute relates to valuation. Under diverse contracts with Karnataka Urban Water Supply and Drainage Board, the appellants agreed to manufacture, supply, lay, joint, commission, test and maintain pipes for 12 months and received a composite price for the same. The appellants manufactured PSC Pipes and cleared the same to various sites of the Board after payment of duty. He submitted that while determining the value of PSC Pipes in question, the Commissioner has determined the value of PSC Pipe based on the data rates provided by the Board and as a result of it, the method of value is untenable and unsustainable in the eye of the law.
4. It was contended on behalf of the appellants that the data fates of value are not based on the actual cost but are based on assessment of the board. It was also submitted that the data rates are not disclosed to the appellants. The data rates are the general assessment of the cost of the project by the board. The pipes manufactured by the appellants in the factory could not be valued under Rule 6 (b)(ii) of the erstwhile Valuation Rules, 1975 but has to be on the actual costs incurred by the appellants. He said the issue involved herein has already covered by decision of the Supreme Court in the case of Union Carbide India Ltd. v. CCE, Calcutta, 2003 (58) ELT 715 (SC). In that case it was held that notional cost of granules is not to be taken as the Rule 6(b)(ii) of C. Excise (Valuation) Rules, 1975 provides for notional profit and not for notional cost – cost as reckoned by a man of commerce is to be adopted. He said that the value determined by the appellants was based on the Chartered Accountants Certificate which cannot be rejected in the absence of any evidence to show that the cost is not in accordance with the costing principles.
5. Shri Narasimha Murthy, learned JDR for the Revenue submitted that the Chartered Accountant Certificate cannot be relied upon in this case since there was no reference of overheading charges in the relevant Certificate issued by the Chartered Accountant. He said that the cost was not properly worked out since the party has been indulging in evasion of excise duty by clearing goods, i.e. PSC Pipes to the worksite at lower assessable value by not considering the cost of certain elements like nuts, hard crates, MS Rods, overheads like depreciation, realization of capital cost on buildings, maintenance of machinery and energy charges and also suppressing the true value of certain elements like Labour and overheads without giving breakup of each element forming these costs which form the cost of PSC pipes at ex-factory price, as it was clearly analysed by the Commissioner in the order while determining the correct value of the Pipes.
5. The Counsel submitted that the details of the overhead charges were submitted to the assessing authority as early as on 17.7.2002 even before fixing the date of hearing on 30.8.2002 and the same has not been properly considered by the Commissioner as can be seen from the impugned order. In this context, he drew our attention to the written submissions filed by the party dated 17.7.2002, particularly Para 17 of the said written submissions which is as under:
“17. Further the allegation that the noticee has not furnished the detailed split up figure of various elements in their Chartered Accountant’s Certificate is not sustainable in view of the fact that the noticee has been submitted the certificate since 1990 and even as late as year 2000, the department had never asked the noticee to product the detailed split up figures. The noticee is now enclosing herewith the detailed spit up figures for the years 1994-95 to 1997-98 and same is marked as Annexure A”, this figures clearly prove that the noticee had considered all the elements that are going into the costing of the PSC Pipes. This evidence conclusively proves that the cast adopted by the noticee for the PSC Pipe’s is legal and valid and in the absence of any evidence let in by the department to prove that the cost certificate is not genuine the rate adopted by the noticee forms the basis for assessable value.”
It was submitted by the Counsel that the written submissions alongwith data for the whole expenses were submitted to the then Commissioner. The successor who heard the matter on 30.8.2002 and passed the order on 24.2.2003 without taking into consideration of the written submissions and accordingly the impugned order is not sustainable in the eye of the law.
6. On seeking the relevant written submissions placed on records, the Department Representative was also of the view that the matter requires to be re-examined by the adjudicating authority and accordingly he requested that the matter may be remanded to the concerned adjudicating authority for de novo consideration.
7. On a careful consideration of the submissions made by both sides, particularly in view of the written submissions dated 17.7.2002 has not been taken into consideration by the adjudicating authority while passing the impugned order, we are of the view that the matter will have to go back for reconsideration. In the view we have taken, the matter is remanded to the concerned adjudicating authority to examine the matter afresh particularly in view of the written submissions and to pass an order accordingly on providing an opportunity to the party. All connected issues are kept open. The adjudicating authority is directed to dispose of the matter at the earliest possible, preferably within 4 months from the date of receipt of this order. The appellants also should co-operate with the Department for the speedy disposal of the matter.
8. Thus, these two appeals are allowed by away of remand.