TaxTMI 
TaxTMI 
2010 (6) TMI 577
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....I is taken on rent for storage due to shortage of space in Unit-II. The appellant herein are manufacturing the final products and clearing them on payment of duty and are also clearing bulk mix to Unit-I for manufacture and clearance of sample packets or sachets. The appellant had cleared the bulk mix under delivery challans and discharged duty liability once in a month on the total quantity of the bulk mix cleared during that month. The appellant herein was following a system of raising consolidated delivery challans in a month with the prefix "BB" for the quantities cleared during the respective month to their unit-I to discharge appropriate duty liability at the end of the month. The appellant's units were visited by the Preventive Unit. The officers also visited the various units and the stockists of the appellant. During the course of investigation, statements of various persons including the Proprietor of the appellant were recorded. Investigation was concluded and the lower authorities came to a tentative conclusion that the appellant ad clandestinely removed the goods in contravention of the provisions of Rule 4, 6, 8, 10, 11 and 12 of the Central Excise Rules, 2002 and Rul....
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....thout payment of duty. It is his submission that there is no corroborative evidence in the form of any illicit purchase of raw materials or excess consumption of electricity by unit No. II. It is his submission that the demand of the duty based on alleged clandestine clearances was only on the basis of assumptions and presumptions and hence not sustainable. They rely on the following judgments : (i) Chemco Steels Pvt. Ltd. v. CCE, Hyderabad - 2005 (191) E.L.T. 856 (Tri.-Bang.) (ii) Dalmia Vinyls (P) Ltd. v. CCE. Hyderabad - 2005 (192) E.L.T. 606 (Tri.-Bang.) (iii) Mohan Steels Ltd. v. CCE, Kanpur - 2004 (177) E.L.T. 668 (Tri.-Del.) (iv) Vigirom Chem Pvt. Ltd. v. CCE, Bangalore - 2010 (251) E.L.T. 544 (Tri-Bang.) (v) CCE, Madurai v. N. Manikandan - 2009 (246) E.L.T. 349 (Tri.-Chennai) (vi) CCE v. Arsh Casting Pvt. Ltd. - 2010 (252) E.L.T. 191 (H.P.) (b) It is his submission that even if it is assumed without accepting that there has been excess clearance from the appellant's unit-II, in the absenc....
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....hat the bulk mix cleared from the appellant's unit-II to unit-I cannot be assessed either on MRP or on pro-rata MRP basis, as it is not a pre-packaged commodity and hence the valuation or the assessable value has to be ascertained as per the provisions of Section 4 read with Valuation Rules, 2000. For this proposition, he would rely upon the judgment of the Hon'ble Supreme Court in the case of Jayanti Food Processing Pvt. Ltd. - 2007 (215) E.L.T. 327 (S.C.) and the judgment of the Tribunal in the case of Malhotra Shaving Products (P) Ltd. - 2010 (250) E.L.T. 118. It is his submission that if Rule 8 of the Valuation Rules, is applied in this case, the appellant needs to discharge the duty liability based on cost of production which is far less than the amount of duty liability discharged by the appellant. He would submit that the demand is barred by limitation, as the entire duty paid on the bulk mix would be available as credit to the appellant's unit No. I and there is no reason for evading duty, as it is undisputed that the appellant's unit No. I has discharged duty liability on the pouches cleared from their factory premises. (d) It is his submission that as....
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....ull - 1983 (13) E.L.T. 1546 (S.C.). 4.1 As regards the valuation of the goods of removal, it is his submission that provisions of Section 4 read with Valuation Rules, 2000 will be attracted in this case and as per the law settled, every Rule has to be exhausted clearly before arriving at the Rule, which needs to be applied. He would submit that going by the scheme of provisions of Valuation Rules, 2000, Rule 4 needs to be considered as there is a value i.e. pro-rata MRP value of the products cleared by the assessee from the factory premises. Hence, it is his submission that the valuation is also correct. 4.2 As regards clearance of Cenvat availed packing materials and inputs without reversing the credit, it is his submission that the appellant has not followed the procedure of storing goods outside the factory premises wherein the credit so availed. It is also his submission that the letter relied upon by the assessee does not indicate that the appellant intends to remove the CENVAT credit availed packing material for storage or for job work. 4.3 As regards the value of samples of various flavours collected from the Unit No. II, it is his submission that the....
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....on the ground that appellants were not able to give any explanation regarding the mismatch of the figures. He had also come to the conclusion that the appellants had not disputed entries in the security register and department is able to establish a case of clandestine removal to such degree of probability that a prudent man, on its basis, believes in the existence of the fact in issue. It is also further held by him that valuation of such goods needs to be done under the provisions of Rule 4 of the Valuation Rules read with Section 4 of the Central Excise Act, 1944. 6.1 After considering the detailed submissions made by both sides and perusal of the records in the impugned order, we find that there is no dispute that Unit No. II is manufacturing bulk mix of protein beverages and also retail packages of the very same product. It is also undisputed that the retail packages were cleared from Unit No. II i.e. the appellant before us. They are discharging duty liability. It is also undisputed that the appellant is clearing bulk protein mix to their unit No. I only. It is also undisputed that Unit No. I is re-packing this bulk protein mix into sample pouches and clear the same o....
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....puted by the lower authorities that the appellant's unit i.e. Unit No. I only has the facility for re-packing of bulk into sample pouches. If that be so, it was for the authorities to investigate and bring on record, clearances, if any, of sample packs from Unit No. I manufactured out of entire bulk mix received from Unit No. II (the appellant herein). We find that the decision cited by the learned Counsel in support of the proposition that clandestine clearance allegation cannot be made on assumptions and presumptions fully support their case and more specifically the following cases :- (i) Chemco Steels Pvt. Ltd. v. CCE, Hyderabad - 2005 (191) E.L.T. 856 (Tri.-Bang.) (ii) Dalmia Vinyls (P) Ltd. v. CCE, Hyderabad - 2005 (192) E.L.T. 606 (Tri.-Bang.) (iii) Mohan Steels Ltd. v. CCE, Kanpur - 2004 (177) E.L.T. 668 (Tri.-Del.) (iv) Vigirom Chem Pvt. Ltd. v. CCE, Bangalore - 2010 (251) E.L.T. 544 (Tri-Bang.) (v) CCE, Madurai v. N. Manikandan - 2009 (246) E.L.T. 349 (Tri.-Chennai) (vi) CCE v. Arsh Casting Pvt. Ltd. - 2010 (252) E.L.T. 191 (H.P.) 6.2 It is....
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....e keeping of packing material in additional space for storage only. 7.1 On a careful consideration of the submissions made by both sides on this point, we find that it is undisputed that the unit No. III where the duty paid packing materials and inputs were found is rented by the assessee and is in his possession as one of the premises. Provisions of CENVAT Credit Rules, 2004 clearly indicate that the duty paid materials can be removed to further processing or job working and can be brought back within 180 days and if it cannot be done so, proportionate credit needs to be reversed and the said credit can be retaken once the assessee is able to correlate the receipt of duty paid inputs and raw materials back to the factory premises. In our considered view, the issue in our hand may not strictly fail under the said category of removal of CENVAT availed packing materials and inputs to job workers but, at the same time, it is seen from the records that the assessee had been always taking a stand that these goods were stored in the premises which they had rented, as there was shortage of space. 7.2 On perusal of the entire case records, we find that there is no allegatio....
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....ve not recorded any statement of any person indicating that this Invoice No. 718 of 28-2-2006 was in fact clearances of sample sachets with protein beverages. The appellants have been taking a consistent plea before the adjudicating authority and before us also that the clearances, which were effected from their unit no. II, is only of empty pouches and unit no. I has only the facility to fill the sample pouches and the said facility is not available in unit no. II or unit no. III during the period of dispute. It is also seen from the records that the Proprietor, in his statement dated 26-7-2006 has categorically stated that what was cleared from the appellant's unit no. II to unit no. I vide this invoice was only empty pouches, intended to be converted into sachets at unit no. I and the said sample sachets were cleared on payment of duty after filling from unit no. I. It is also seen from the records that the invoice dated 28-2-2006 is for a period, which is subsequent to the period in dispute before us. i.e. period in dispute before us is 2004-05, 2005-06 (upto January, 2006). The evidences collected beyond the period in dispute cannot be relied upon for confirmation of the deman....