TaxTMI 
TaxTMI 
2008 (9) TMI 713
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..... KBEPL, located at Plot No N-3, Additional MIDC, Satara are engaged in the manufacture of excisable goods viz. Sugar Machineries and Special products falling under Chapter 84. 4. There are following three main issues involved in this case : (i) KBEPL have received orders for supply of goods from various sugar factories. They are manufacturing some of such goods in their factory and rest are bought out and supplied to customers, majority of whom are sugar factories. The customers have notified composit purchase value for sugar plant or assemblies and have not prescribed 'transaction value' for individual parts and components. It has been alleged that KBEPL have under­valued the manufactured goods and over-valued the bought out goods and the amount of over-valuation of the bought out goods is almost to the same extent as that of under-valuation of the manufactured goods. It has been further alleged that this has been done with intention to evade payment of Cenvat duty. The extent of duty involved on this count is Rs. 3,73,39,200/- during the period from 1-10-2000....
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....uts for manufactured goods from the General Ledger of KBEPL. To this was added the manufacturing expenses incurred, employees cost, depreciation of plant, machinery etc. interest, administration, selling, distribution and other expenses as also profit margin. All these expense figures have been taken from Audited Annual Accounts. Accordingly, the Cost Auditor has arrived at the reasonable assessable value of the excisable goods manufactured by KBEPL, which prima facie cannot be faulted. Similarly, the Cost Auditor has taken into consideration the purchase cost of bought out goods from General Ledger of KBEPL. To this has been added the Employee Cost, interest, administration, selling and distribution and other expenses as also profit margin. All these expenses figures have been taken from the Audited Annual Accounts. Common expenses for manufactured items and bought out items have been distributed following the principles of costing and thus the reasonable sale price of bought out items has been arrived at. Comparison of the reasonable sale price of bought out goods and the reasonable assessable value of the excisable goods manufactured by KBEPL so arrived at, prima facie indicates....
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....ract. It is found that drawing, designing and engineering charges are included in the total contract amount quoted by the customers but the said charges are not included in the assessable value of excisable goods manufactured by KBEPL as their price break up is done without following any costing/valuation norms. However, the cost audit report has considered all the expenses incurred on manufacturing by KBEPL and, therefore, the assessable value proposed by the Department in this demand includes expenses on drawing, designing and engineering. 5.2 The ratio of the case law in the case of CCE, New Delhi v. Guru Nanak Refrigeration Corporation reported in 2003 (153) E.L.T. 249 (S.C.) cited by KBEPL cannot be applied to the present case as in that case the normal price within the meaning of clause (a) of sub-section (1) of Section 4 of the Central Excise Act, 1944 was ascertainable and there was no valid reason to doubt the genuineness of the sale price, whereas in this case, there is valid reason to doubt the genuineness of the sale price in-as-much as the price break up prepared by KBEPL in respect of excisable goods cannot be treated as 'transaction value' under Section 4(1)(....
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.... of Objection' has been shown as nil. We, however, note that the demand relates to the period from 1-10-2000 to 10-1-2005 whereas the audit period is from April 03 to Feb, 08. Thus only the part period is covered by the Audit and not full period. We have also perused the evidences as recorded in para 30 of the findings portion of the Order of the Commissioner. No satisfactory rebuttal is prima facie forthcoming against these evidences, in the appeal memorandum filed by KBEPL. The Commissioner has observed that since KBEPL were illegally showing the goods to have been manufactured at Goa and paying duty, such payment cannot be taken to be the payment of duty and, therefore, the benefit of Cenvat duty paid at Goa is not admissible. This defies logic. Once payment at Goa is not denied, whether it is duty or not, it has to be offset against the duty payable at KBEPL, Satara. 7. As regards the issue at para 4(iii) is concerned, the demand relates to the escalation bills raised by KBEPL on two sugar factories namely M/s. Shri Dhanlaxmi SSK Niyamit and M/s. The Markandeya Co-op Sugar Mills Ltd. due to increase in the input costs. These sugar factories have agreed and provided the ....