TaxTMI 
TaxTMI 
TaxTMI 
2011 (2) TMI 642
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....ical division of the Appelalnt company at Nagda to their Fibre Division at Nagda and to their factory at Harihar and also to the factories of their sister companies at Kosamba and Alibagh. The period of dispute is from April 1998 to June 2000. During this period, as per the provisions of Rule 6 (b) of the Central Excise (Valuation) Rules, 1975 (hereinafter referred to as "Valuation Rules"), where the excisable goods are not sold by the assessee but are used or consumed by him or on his behalf for the production or manufacture of other articles, the value would be based on the value of comparable goods produced or manufactured by the assessee or by any other assessee, as adjusted after taking into consideration all the relevant factors, including the difference, if any, in the material characteristics of the goods to be assessed and of the comparable goods and if the value of such captively consumed goods could not be determined in this manner, the same was to be determined on the basis of cost of production or manufacture including profit, if any, which the assessee would have normally earned on the sale of such goods. In this case, there is no dispute that the clearances of Causti....
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....ependent buyers during the previous month and the duty was being paid on this value only, there was no justification for the appellant to adopt lower assessable values in respect of clearances of Caustic Soda lye to the units at Harihar, Kosamba and Alibagh. It also appeared that the fact regarding adoption of lower assessable value in respect of clearances of Caustic Soda lye to the factories at Harihar, Kosamba and Alibagh was never disclosed by the appellant unit to the Department. It is on this basis that a show cause notice dated 23rd April 2003 was issued to the appellant unit for - (a) recovery of allegedly short paid duty amounting to Rs. 51,48,439/- alongwith interest on this duty at the applicable rate as per the provisions of Section 11AB of the Central Excise Act, 1944 in respect of clearances of Caustic Soda lye to the factories at Harihar, Kosamba and Alibagh during the period from April 1998 to 30th June 2000 ; and (b) imposition of penalty on the appellant unit under Section 11AC of Central Excise Act, 1944 as well as under Rule 173Q of Central Excise Rules, 1944 for contravention of the provisions of Rule 9(1)173C, 173F of the Central Excise Rules. 1.3....
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.... the Appellant unit's selling price of the goods at Nagda to independent buyers, that in any case, the demand is time barred, as the department of aware of this practice, that this is clear from the letter dated 20th December 1995 addressed by the Range Superintendent to the appellant company wherein it was mentioned that the scrutiny of the sale invoices and price declarations of Caustic Soda lye reveals that the appellant are removing Caustic Soda lye to their sister concerns at Harihar and Alibagh at arbitrarily low price, whereas the same product is being removed to their local sister concern (Fibre division) at much higher rate on the basis of selling price of the sales to independent buyers during the previous month and the appellant were asked to explain the reasons for such difference in the assessable value of the goods cleared for captive consumption to different units, that from this letter of the department, it is clear that the prices of removal of Caustic Soda lye to the factories at Harihar, Kosamba and Alibagh had been declared to the department and the department was aware of the fact that the assessable value of Caustic Soda lye in respect of clearances to Harihar....
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....ce at which the receiving units were purchasing the comparable goods from other buyers, that the practice adopted by the appellant is without the support of the law and contrary to the provisions of Rule 6(b)(i) of the Valuation Rules, that self assessment procedure had been introduced since March 1994 and no price declarations were filed by the appellant during the period of dispute, that even if the wrong practice adopted by the appellant came to the notice of the department in 1995 and the Range Superintendent wrote a letter to the appellant company seeking their clarification, it is not known as to whether any clarification was given by the appellant, that in any case, during the period of dispute, no price declarations had been filed and there was no information from the assessee that in respect of their clearances of the Caustic Soda lye to the units at Harihar, Kosamba and Alibagh, they are adopting a lower assessable value based on the average purchase price of the Caustic Soda lye by the receiving units from other buyers, that the appellant, therefore, are guilty of suppression the relevant information and, hence, the longer limitation period under proviso to Section 11A(1....
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....Excise Act, 1944 readwith Central Excise Valuation Rules, 1975. 5. As per the provisions of clause (a) of Sub-Section (1) of Section 4 of the Central Excise Act, 1944, as it stood during the period of dispute, the assessable value of the excisable goods attracting duty at ad-valorem rate was deemed to be the "normal price" of the goods, that is to say, the price at which such goods are ordinarily sold by the assessee to the buyers in course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale. As per the provisions of the proviso (i) and (ia) to Section 4(1)(a), this normal price could be different for different classes of buyers and where such goods are ordinarily sold by the assessee at different prices at different places of removal, each such price, subject to the existence of other circumstances specified in Clause (a) shall be deemed to be the normal price of such goods in relation to such places of removal. As per proviso (iii) to Section 4(1)(a), where the entire sales of the assessee are to or through a related person, as defined in Section 4(4)(c) of the Central....
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....sment could not be determined under Rule 4 or Rule 5 and the goods are either sold by the assessee in retail or the goods cleared are not sold by the assessee but are used for captive consumption for manufacture of other articles or the entire sales are to or through related persons and the value cannot be determined under third proviso to Section 4(1)(a). Thus, Rule 6 can be applied only when the assessable value cannot be determined under Rule 4 or Rule 5 and if the assessable value could be determined under Rule 4 or 5, there would be no justification for invoking Rule 6. In this case, from the records it is clear that the Appellant unit, in addition to the clearances of Caustic Soda lye to their fibre division at Nagda and to the factories of M/s. Birla Cellulosic, Kosamba, M/s. Grasim Industries Ltd., Harihar, M/s. Vikram Ispat, Alibagh, was having clearances of Caustic Soda lye to independent buyers also and it is for this reason only that the Jurisdictional Assistant Commissioner vide his letter dated 9-1-97 had allowed the Appellant unit to clear Caustic Soda lye to its fibre division at Nagda at the average sale price to independent buyers for the previous month. If this i....
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.... 20th December 1995 To, M/s. Grasim Ind. Ltd. (Caustic Soda Membrane Cell Divn.) Birlagrum Nagda. Dear Sirs, Subject : Discrepancy in determination of assessable value of Caustic Soda lye Scrutiny of relevant sales invoices and price declarations of Caustic Soda Lye reveals that you are removing Caustic Soda Lye to your sister concern at Harihar, Kumarpatnam & Dharmator at an exorbitantly low price, whereas the same product is being removed to your local sister concern at much higher value on the basis of average price of outside sales. It is not understood as to how you are adopting different practice of sale to your sister concerns. Therefore in view of above you are requested to submit the costing data of Caustic Soda lye for all months of year 1995-96 alongwith the Govt, audit report for the year 1994-95. You are further advised to calculate the differential duty on all such supplies made during the year and pay the duty accordingly under intimation to undersigned. Yours faithfully, Sd/- Superintendent, Central Excise, R-I, Nagda." 6.1.1 From the perusal of this letter, it is clear that price declarations, as well as the sales invoices of Caustic ....