TaxTMI 
TaxTMI 
TaxTMI 
2015 (8) TMI 23
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.... appellant is having a unit in Dharavi, Mumbai where they are manufacturing unsterilised absorbable sutures. These sutures are being cleared by the appellant on payment of duty from their Dharavi unit. After clearance of such sutures, these are sent to their unit located in Aurangabad where these are used as inputs in further manufacturing process. The issue is relating to valuation of the goods manufactured at Dharavi unit. The appellant is valuing the said goods under Rule 8 of the Central Excise Valuation Rules read with Section 4(1)(b) of the Central Excise Act, 1944. There is no dispute between the appellant and the Revenue about the applicability of the said rule or the section. The dispute in this case is started with the value of the goods arrived at by following Rule 8 of the Central Excise Valuation Rules. 3. Learned senior counsel for the appellant, at the outset, submitted that they are not disputing the duty demanded by the Revenue as the same was paid by the appellant even before issue of show cause notice, they are only disputing the penalty imposed under Section 11AC and Rule 25 of the Central Excise Rules, 2002. 4. As far as the first appeal i.e. E/403/06 is conc....
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....d to any specific doubts with reference to the standard cost of production details. It was also submitted that the Assistant Director (Costs) has neither provided any report regarding verification of cost of production nor doubted the actual cost of production arrived at by the appellant on finalization of accounts. It was submitted that this is not a case where the basis of valuation adopted by the appellant is disputed or certain components of costs have not been included by the appellant and there is no allegation in relation to the application of wrong or incorrectly applying the basis of valuation. It was also submitted that differential duty payment made by the appellant on the basis of its own quantification of cost of production has been accepted by the department. It was also submitted that when the actual cost of production provided by the appellant for the year 2004 is compared with the cost of production provided by the appellant for the year 2003, it can be seen that in relation to several of the products manufactured by the appellant, the cost of production has come down while in some other cases, it has gone up and these facts have not been disputed by the department....
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....ssioner (AR) submitted that the appellant was paying duty on the basis of cost of production during 2003. While it is true that in the beginning of 2004, they submitted a sheet indicating the cost of production of various items and assessable value, however, the same was not supported by the details. The appellant was clearing the goods on self assessment basis as per the assessable value declared in the said letter dated 7.1.2004. It was submitted that the department thereafter wrote to them on 12.8.2004 that while the clearances affected by them during April to July 2004 had gone up but the revenue had come down and asked them to explain the matter. There was no response. Thereafter the department again wrote a very detailed letter dated 23.8.2004 asking various questions. The appellant vide their reply dated 31.8.2004 replied and submitted that their cost of raw material, cost of labour, variable and fixed costs have come down and it is because of that that the assessable value of the various items has come down and the duty is being correctly paid. Since the reply of the party was vague and not satisfactory, the department decided to refer the matter to the specialized officer ....
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....ot entitled to take the credit under Rule 9(1)(b). In support of his contention, the learned AR submitted the judgment of the Tribunal which has been upheld by a speaking order by the Hon'ble Supreme Court in the case of Ballarpur Industries (supra). In view of the said position, the learned AR submitted that both the appeals are required to be dismissed. 6. We have gone through the rival submissions. As far as the first appeal i.e. E/403/06 is concerned, the appellant is not disputing the duty demand. The dispute is only relating to penalty imposed under Section 11AC and Rule 25. The relevant part of Section 11AC reads as under:- "SECTION 11AC. Penalty for short-levy or non-levy of duty in certain cases. Where any duty of excise has not been levied or paid or short-levied or short paid or erroneously refunded, by reason of fraud or collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made there under with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of section 11A shall also be liable to pay a penalty equal to the duty so determined;....
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.... GUT 51 CM 2 2.88 1.67 2.97 22 GUT 51 CM 3 2.88 1.80 3.18 23 GUT 51 CM 1/0 2.47 1.45 2.58 24 GUT 51 CM 2/0 2.54 1.42 2.52 25 GUT 51 CM 3/0 2.59 1.28 2.27 26 GUT 51 CM 4/0 3.67 2.01 3.55 27 GUT 51 CM 5/0 10.48 4.60 8.16 28 GUT 45 CM 3/0 2.59 2.42 4.30 29 GUT 45 CM 4/0 3.67 3.14 5.56 30 GUT 45 CM 5/0 10.48 4.60 8.16 31 GUT 38 CM 3/0 2.59 1.21 2.15 32 GUT 38 CM 4/0 3.67 1.57 2.78 33 GUT 38 CM 6/0 6.00 2.61 4.64 34 GUT 30 CM 5/0 10.48 2.30 4.08 It is seen from the chart, there was drastic reduction in declared values w.e.f. 2.1.2004. After thorough enquiry, the revised assessable values were in the same range (with 10%) variation) as existing prior to 2.1.2004. 6.2 The learned senior counsel has also submitted that in January 2004, they had submitted the Cost Accountant s certificate based upon the estimation and they were to give the final figures after the completion of the year. We do not find any substance in this plea of the learned senior counsel. If that was so, the correct procedure would be to follow the provisional assessment under Rule 7 of the Central Excise Rules, 2002. Further, the certificate dated 2.1.2004 or the letter dated 7.1.2004 nowher....
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....he present case, there can be no doubt that there was a wilful misstatement and suppression of fact. Under these circumstances, we do not think the case laws quoted are of any help to the appellant and we do not consider it necessary to discuss the facts of each and every case. 6.4 In addition, penalty under Rule 25 has also been imposed. Rule 25 of the Central Excise Rules reads as under:- Rule 25-Confiscation and Penalty (1) Subject to the provisions of Section 11AC of the Act, if any producer, manufacturer, registered person or a warehouse or a registered dealer;- (a) remove any exciseable goods in contravention of any of the provisions of these rules or the notifications issued under these rules; or (b) does not account for any exciseable goods produced or manufactured or stored by him; or (c) engages in the manufacture, production or storage or any exciseable goods without having applied for the registration certificate required under section 6 of the Act; or (d) contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty, then, all such goods shall be liable to confiscation and the producer o....
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....phs 15 and 16 by their Lordships to the following effect : "15. Under Section 4(1)(a) normal price was the basis of the assessable value. It was the price at which goods were ordinarily sold by the assessee to the buyer in the course of wholesale trade. Under Section 4(1)(b) it was provided that if the price was not ascertainable for the reason that such goods were not sold or for any other reason, the nearest equivalent thereof had to be determined in terms of the Valuation Rules, 1975. Therefore, Rule 57CC has to be read in the context of Section 4(1) of the 1944 Act, as it stood at the relevant time. Section 4(1)(a) equated value to the normal price which in turn referred to goods being ordinarily sold in the course of wholesale trade. In other words, normal price, which in turn referred to goods being ordinarily sold in the course of wholesale trade at the time of removal, constituted the basis of the assessable value. Rule 57CC(1) proceeds on the basis that the manufacturer has taken credit of the specified duty on common inputs which needs to be reversed at eight per cent (i.e. the manufacturer needs to debit an amount equal to eight per cent of the price of the exempted fin....
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....ified in the Second Schedule to the Tariff Act, leviable under the Act; (iii) The additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978 (40 of 1978); (iv) The additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957); (v) The National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001), as amended by section 169 of the Finance Act, 2003 (32 of 2003) which was amended by section 3 of the Finance Act, 2004 (13 of 2004); (vi) The Education Cess on excisable goods leviable under clause 81 read with clause 83 of the Finance Bill (No. 2), 2004, which by virtue of the declaration made in the said Finance Bill under the Provisional Collection of Taxes Act, 1931 (16 of 1931), has the force of law; (vii) The additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under clauses (i), (ii), (iii), (iv), (v) and (vi) above; and (viii) The additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of 2003). Paid on any input....
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.... Excise, dated the 8th July, 1999. [Provided also that the CENVAT credit of the duty paid on the inputs used in the manufacture of final products cleared after availing of the exemption under the notifications No. 39/2001-Central Excise, dated the 31st July, 2001 [G.S.R. 565(E), dated the 31st July, 2001], No. 56/2002-Centrai Excise, dated the 14th November, 2002 (G.S.R 764(E), dated the 14th November, 2002], No. 57/2002-Central Excise, dated 14th November 2002 [G.S.R. 765(E), dated the 14th November, 2002], notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 56/2003-Central Excise, dated the 25th June, 2003 [G.S.R. 513(E), dated the 25th June, 2003], and No. 71/2003-Central Excise, dated the 9th September, 2003 [G.S.R. 717(E), dated the 9th September, 2003], Shall respectively be utilized only for payment of duty on final products, in respect of which exemption under the said notifications No. 39/2001-Central Excise, dated the 31st July, 2001, No. 56/2002-Central Excise, dated the 14th November, 2002, No. 57/2002-Central Excise, dated the 25th June, 2003, and No. 71/2003-Central Excise, dated the 9th September, 2003, is availed of.] [(....