TaxTMI 
TaxTMI 
2014 (12) TMI 113
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....upled pipes were chargeable to nil rate of duty and according to the Department for this reason, the HDPE pipes would not eligible for exemption under Notification No. 67/1995-C.E. The period of dispute in this case is from 1-4-99 to 11-12-2001 and during this period, the appellant were paying duty on the HDPE pipes cleared for captive consumption on the assessable value determined under Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975 during the period till 30th June 2000 and on the value determined under Rule 8 of the Central Excise Valuation Rules, 2000 i.e. 110%/115% of the cost of production during the period w.e.f. 1-7-2000. The department's allegation is that the cost of production during the respective period i.e. during period from 1999-2000, 2000-2001 and 2001-2002 (upto 11-12-2001) has not been correctly determined which has resulted in short payment of duty. It is on this basis that a show cause notice dated 13-9-2002 was issued to the appellant for recovery of allegedly short paid duty amounting to Rs. 23,18,305/- during the period from 1-4-99 to 11-12-2001 along with interest thereon under Section 11AB and also for imposition of penalty on the appellant under....
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....sposal after waiving the requirement of pre-deposit. 2. Heard both the sides. 3. Shri B.K. Singh and Shri Vijay Kumar, Advocates, the learned Counsels for the appellant, pleaded that the appellant manufacture parts of Sprinkler Irrigation System - HDPE Couples pipes which are classifiable under sub-heading 8424.91, where the rate of duty is nil, that the appellant also manufacture HDPE pipes which are cleared for captive consumption for use in the manufacture of HDPE Coupled pipes, that rate of duty on the parts of Sprinkler Irrigation System is nil, but the department, by classifying the HDPE pipes under sub-heading 391700 has demanded duty in respect of the same on the ground that the pipes cleared for captive consumption would not be eligible for exemption under Notification No. 67/95-C.E. as the duty on the final product - parts of Sprinkler Irrigation System is nil, that the appellant were paying duty on the clearances of HDPE pipes for captive consumption on the value determined under Rule 6(b)(ii) of the Erstwhile Central Excise Valuation Rules, 1975 till 30th June 2000 and under Rule 8 of the Central Excise Valuation Rules, 2000 w.e.f. 1-7-2000, that during the ....
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....hat this view of the Commissioner is totally incorrect, that even if the show cause notice demanding differential duty had been issued on the basis of allegation that the assessable value of the goods based on the cost of production has not been correctly determined, no duty would be demandable if on the basis of correct classification of the goods, the rate of duty applicable is nil and that in view of the above submissions, the impugned order is not correct. 4. Shri Jayant Sahai, the learned DR, defended the impugned order by reiterating the findings of the Commissioner in it and emphasized that the financial cost, depreciation, and marketing expenses are also to be included in the cost of production, as in terms of the Apex Court's judgment in the case of UOI & Ors. etc. etc. v. Bombay Tyre International Ltd. etc. etc. reported in 1983 (14) E.L.T. 1896 (S.C.), all these expenses have to be included in the assessable value of the goods. He also pleaded that since the show cause notice has been issued only on the issue of valuation, the question of classification of the goods cannot be raised by the appellant and the Commissioner has correctly refused to go into the question....
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....ssification issue is not correct, as show cause notice after all was for demand of duty though on the ground of undervaluation, and if it is found that the goods themselves are not liable to duty for the reason that the same being classifiable under heading 8424 are chargeable to nil rate of duty, there would be no question of duty demand based on undervaluation and, as such, the question of undervaluation would be irrelevant. Therefore, the Commissioner should have considered the appellant's plea with regard to classification and given a finding and only if the Commissioner was of the view that the appellant's plea with regard to classification of the HDPE pipes under heading 8424 is not acceptable, only then the question of valuation would be relevant. Therefore, for this reason, this matter has to be remanded to Commissioner for considering the appellant's plea with regard to classification. 8. As regards the valuation issue, as mentioned above, there is no dispute that the value of the goods is to be determined on the basis of cost of production - under Rule 6(b)(ii) of Central Excise Valuation Rules, 1975 during the period prior to 1-7-2000 and under Rule 8 of the Centra....