Whirlpool of India Ltd. Vs. Cce, New Delhi - Court Judgment

Excerpt:
1. appellants herein are engaged in the manufacture and supply of certain items such as super enamelled copper wire, refrigerator parts etc. to one of their units at faridabad on stock transfer basis to be used captively for further manufacture and clearing the same on payment of duty by taking assessable value on the basis of price declaration filed as per rule 173c of the central excise rules. assessable value of the goods was determined on the basis of cost of production in terms of rule 6b(ii) of the valuation rules. the appellant had added 'nil' profits to the cost of production since they claimed that there was no profit during the previous financial year i.e. 1994-95. however, the audited balance sheet for the year ending 30th september 1995 showed that the appellant had earned 14.91% gross profit which resulted in under-valuation of goods cleared during the period may to september 1996 to the extent of rs. 2,47,635 and short payment of duty of approximately rs. 77.74 lacs as per show cause notice dated 23.11.96 and approximately rs. 36,000 in respect of notice dated 26.9.96. the entire demand of approximately rs. 78.11 lacs was confirmed by the adjudicating authority. he also imposed penalty of rs. 20,00,000 upon the appellant. in the impugned order the commissioner (appeals) has held that the ground for ignoring certain expenses while working out the cost of goods manufactured by the appellant is not revealed in the show cause notice and also not discussed by the adjudicating authority and has, hence, set aside the same and remanded the case for fresh decision.2. assessees contend that they are aggrieved by the observation in the impugned order that - "i observe that the expenses against the head 'administrative & selling expenses' in the balance sheet contain a number of expenses like freight, cartage, octroi, commission paid to commission agents etc. which are clearly expenses connected to sale of goods." however, we are not able to understand the logic behind the submission that this observation is likely to prejudice the adjudicating authority while passing fresh orders pursuant to remand orders of the commissioner (appeals). commissioner (appeals) had given clear direction that the assistant commissioner should examine the administrative and selling expenses as reflected in the balance sheet and give reasons if any of these expenses are not to be taken into account for the purpose of computing the cost of the impugned goods.she has also held that finding should be recorded on the plea that expenses on account of interest and financial charges and voluntary retirement scheme should have been added while computing the cost of the finished goods. the entire method is open for fresh decision before the assistant commissioner. therefore, we see no reason to interfere with the impugned order which does not suffer from any infirmity. we accordingly uphold the same and reject the appeal.

Judgment:
1. Appellants herein are engaged in the manufacture and supply of certain items such as super enamelled copper wire, refrigerator parts etc. to one of their units at Faridabad on stock transfer basis to be used captively for further manufacture and clearing the same on payment of duty by taking assessable value on the basis of price declaration filed as per Rule 173C of the Central Excise Rules. Assessable value of the goods was determined on the basis of cost of production in terms of Rule 6B(ii) of the Valuation Rules. The appellant had added 'nil' profits to the cost of production since they claimed that there was no profit during the previous financial year i.e. 1994-95. However, the audited balance sheet for the year ending 30th September 1995 showed that the appellant had earned 14.91% gross profit which resulted in under-valuation of goods cleared during the period May to September 1996 to the extent of Rs. 2,47,635 and short payment of duty of approximately Rs. 77.74 Lacs as per show cause notice dated 23.11.96 and approximately Rs. 36,000 in respect of notice dated 26.9.96. The entire demand of approximately Rs. 78.11 Lacs was confirmed by the adjudicating authority. he also imposed penalty of Rs. 20,00,000 upon the appellant. In the impugned order the Commissioner (Appeals) has held that the ground for ignoring certain expenses while working out the cost of goods manufactured by the appellant is not revealed in the show cause notice and also not discussed by the adjudicating authority and has, hence, set aside the same and remanded the case for fresh decision.

2. Assessees contend that they are aggrieved by the observation in the impugned order that - "I observe that the expenses against the head 'Administrative & Selling expenses' in the Balance Sheet contain a number of expenses like freight, cartage, octroi, commission paid to commission agents etc. which are clearly expenses connected to sale of goods." However, we are not able to understand the logic behind the submission that this observation is likely to prejudice the adjudicating authority while passing fresh orders pursuant to remand orders of the Commissioner (Appeals). Commissioner (Appeals) had given clear direction that the Assistant Commissioner should examine the administrative and selling expenses as reflected in the balance sheet and give reasons if any of these expenses are not to be taken into account for the purpose of computing the cost of the impugned goods.

She has also held that finding should be recorded on the plea that expenses on account of interest and financial charges and voluntary retirement scheme should have been added while computing the cost of the finished goods. The entire method is open for fresh decision before the Assistant Commissioner. Therefore, we see no reason to interfere with the impugned order which does not suffer from any infirmity. We accordingly uphold the same and reject the appeal.