TaxTMI 
TaxTMI 
2015 (12) TMI 591
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.... Further, it was alleged that valuation adopted by the appellant on the DTA clearance is to be enhanced based on the FOB value of exports. Adjudicating authority in his order confirmed the demand of Rs. 6,60,61,346/- under proviso to Section 11A along with interest and also imposed equal penalty under section 11AC. E/325/2008 3. Appellants were issued with SCN No.42/2007 dt. 1.11.2007 demanding differential duty on the goods cleared to DTA. It was alleged that value adopted by the appellant on the comparable goods cleared to DTA is to be denied and FOB value of exports should be adopted for valuation. SCN also proposed levy of Special Additional Duty (S.A.D.) for calculating differential duty and whether S.A.D. to be considered when goods are not sold but sent to their own units on stock transfer basis and also whether higher education cess should be considered under Section 3 (1) of Central Excise Act. Adjudicating authority confirmed the demand of Rs. 4,94,11,050/- under Section 11A along with interest and imposed penalty of Rs. 50 lakhs under Rule 25 of Central Excise Rules, 2002. E/130-134/2008 4. The issue in these appeals are identical to Appeal E/325/2008 only the demand....
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....rm of computer printouts and also soft copies of ERP documents. The adjudicating authority held that as these are only computer printouts and cannot be considered as records as proof of consumption of indigenous raw materials and manufacture of final products. The adjudicating authority also held that as the appellants failed to maintain hard copies of internal records batch wise evidencing consumption of raw material. He submits that their unit is fully adopted to ERP systems and the manufacturing and production of finished goods are fully accounted and can be easily verified from the receipt of inputs stage to clearance of final products each stage. The clearance of final products are clearly declared in RT-2. The adjudicating authority relied Board's circular dt. 21.12.2001 and held that they have to maintain separate registers but failed to reconcile the data submitted in the form of computer printouts. He submits that since they have satisfied condition (3) of Notfn No.23/2003 they are eligible for payment of normal excise duty. He relied the following decisions : (1) CCE Surat-I Vs Prime Furnishing Pvt. Ltd. 2014 (308) ELT 505 (Tri.-Ahmd.) (2) CCE Ludhiana VsMalwa Cot....
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.... of appeal E/18/08, out of total demand confirmed in the OIO, Rs. 2,29,88,663/- is hit by limitation as there is no suppression of facts. The SCN was issued only on 2.4.2007 whereas the department sought clarification on 28.9.2004 and they submitted all the details of DTA clearances and consumption of indigenous raw materials in 2004 covering the period April 2004 to July 2004 and the ARE-1 returns filed in time. The department was fully aware of the facts and the above demand amount of Rs. 2,29,88,663/- is hit by limitation. On limitation, he relied the following decisions :- (1) Commissioner Vs Meghmani Dyes & Intermediates Ltd. 2013 (288) ELT 514 (Guj.) (2) Ruia Aquaculture Farms Ltd. Vs CC 2006 (199) ELT 241 (Tri.-Mumbai) (3) CCE Indore Vs Mild India Industries Ltd. 2005 (189) ELT 224 (Tri.-Del.) (4) Reliance Industries Ltd. CCE Mumbai 2003 (159) ELT 164 (Tri.-Mumbai) (5) Norton Intec Rubbers (P) Ltd. Vs CC Madras 2004 (164) ELT 5 (Mad.) 10. On the third issue of S.A.D, he submits that adjudicating authority has not excluded the S.A.D. and held that since appellant has not made any sale but only effected inter-unit transfer, SAD is inclu....
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..... 14. Appeal E/325/2008: The AR submits that appellants have failed to establish the case with evidence that proviso to section 3(1)of Central Excise Tariff Act is applicable. Regarding valuation, he drew our attention to the impugned order para 13.03.18of the first OIO dt.28.9.07 in appeal E/18/2008 wherein the adjudicating authority has given a clear finding and also submits that appellant themselves have adopted FOB price for determining the value of some DTA clearances where buyers were unrelated. He drew our attention to section 3(1) of Central Excise Act wherein the value of goods is to be determined in accordance with provisions of Customs Act and Customs Tariff Act under Section 14 of Customs Act. Price of goods is offered for sale in the course of international trade. Therefore, the rules made thereunder customs act or valuation rules becomes relevant for the purpose of proviso to section 3 (1) of Central Excise Act. He also submits that DTA clearances by EOU does not answer the rule of valuation. In the absence of any evidence for Rule 5, under rule 7 of CVR read with section 4 of Customs Valuation Rules, the sale price charged to a customer in India cannot be considered....
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.... transfer basis to their sister unit located in the States of Gujarat and Maharashtra and the Union Territory of Dadra. The issues to be decided on all the four appeals are as under :- (1) In appeal No.E/18/2008, the main issue is whether indigenous inputs have been used in the manufacture of finished goods cleared in DTA and whether condition (3) of the Notfn 23/03 is admissible to appellant or otherwise. (2) Whether the valuation adopted by Revenue for determining the transaction value of DTA clearance by taking FOB value instead computed value is correct or otherwise. Whether there was suppression of facts or not and whether the demand is hit by limitation or otherwise. (3) In respect of three remaining appeals, the issue in addition to valuation of adopting FOB value, whether Special Additional Duty (SAD) to be considered while calculating the rate of duty of Central excise under section 3 (1)of Central Excise Act for the clearances made to their sister unit on inter unit stock transfer; Whether the goods are not exempted from VAT by the State Government and (4) the last issue is whether education cess and higher secondary education cess to be considered thrice while....
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.... 3 of the Central Excise Act as specified in the corresponding entry in column (4) of the said Table. Sr. No. Chapter or heading No. or sub-heading No. Description of Goods Amount of Duty Conditions (1) (2) (3) (4) (5) ... ... ... ... ... (3) Any Chapter All goods other than those referred to in Sr. Nos. 5, 5A, 6, 7 and 7A [OLD-Sr.Nos.5,6 and 7 of] of this Table In excess of amount equal to aggregate of duties of excise leviable under Section 3 of the Central Excise Act or under any other law for the time being in force on like goods produced or manufactured in India other than in an export oriented undertaking, if sold in India ANNEXURE S. No. Conditions 3 If,- The (i) goods are produced or manufactured wholly from the raw materials produced or manufactured in India; the (ii) goods are cleared into Domestic Tariff Area in accordance with sub-paragraphs (a), (b), (e) and (g) of Paragraph 6.8 of the Export and Import Policy; and (iii) such goods, if manufactured and cleared by the unit other than export oriented undertaking are not wholly exempt from duties of Excise or are not chargeable to "NIL" rate of duty. 20. As seen from....
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....e Hydrochloride was consumed in the manufacture of METADOXINE IH under Invoice No.L018 under 3 lot numbers i.e. (i) Lot No.183RI40654 [45,660 kgs.] and (ii) Lot No.183RI40999 [49,410 kgs.] and (iii) Lot No.183RI41123 [4,930 kgs.]. For second lot the supplier's name was shown as C.J. Shah & Co. and the input invoice Nos.312417 and 012250. From the above sequence of this Batch Manufacturing Records (BMR) for the said invoice read with system generated report of E.R.P, we are convinced that the quantity of 100 kgs. Pyridoxine Hydrochloride (Vitamin B6) is related to Batch No.PDEL0381 and as evident from the name of the supplier it is proved beyond doubt that the input is procured indigenously used in the manufacture of METADOXINE. 22. We find that the entire work sheet submitted by the appellant for 57 invoices which is generated by the system and combined with BMR and the Appellant's contended that in the same sequence the entire quantity of inputs can be tallied and traced back to the final product manufactured and cleared in respect of each invoice. 23. It is pertinent to see that the same set of documents discussed above were also submitted before the adjudicating author....
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....on, are not used in the manufacture of the final products to be cleared in DTA. But the intention is certainly not to insist upon separate machinery, separate godowns and separate branches of manufacturing process (which would amount to establishing a separate factory within the factory) before extending the benefit of the above-said Circular." As evident from the above circular, the Board has categorically clarified that jurisdictional officer need to satisfy themselves that the goods in DTA have been manufactured wholly out of indigenous raw material. The said circular also empowers the adjudicating authority to engage Cost Accountant if necessary and get the input and output norms fixed for both indigenous and imported goods. 25. In this regard, it is pertinent to state that the CBEC had already implemented special mechanism to verify the ERP data or SAP etc. through Excise Audit 2000 (EA-2000) for consumption of raw materials and manufacture of final products which are maintained in any ERP system. In the Excise Audit (EA 2000) Procedure, the Board has empowered the jurisdictional officers to carryout Computer Aided Audit Programme (CAAP) wherein the entire audit of records i....
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.... adjudicating authority with the above directions. 27. As regards the limitation issue raised by appellant, in respect of same appeal No.E/18/2008, since the main demand itself is remanded to the adjudicating authority, that authority is directed to examine the issue on limitation while deciding the case in de novo. 28. We now propose to discuss the second issue on valuation. The adjudicating authority in his impugned orders compared the FOB price and enhanced the transaction value for the DTA clearances. Whereas the appellant contended that the majority of goods were cleared to sister unit on stock transfer basis and they had arrived the transaction value by taking the computed value. We find that the adjudicating authority rejected the appellant's transaction value of Rs. 609/- but has taken the FOB price of Rs. 1450 in respect of unrelated DTA clearance and adopted FOB price of Rs. 2267/- in respect of stock transfer to their sister units. In this regard, we find that this issue has been settled by various Tribunal decisions wherein the Tribunal held that FOB value of export cannot be adopted for payment of duty for DTA sales. The Tribunal's decisions in the case of (1) ....
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....uced asunder :- "10. We are unable to accept the contentions raised by the ld. Departmental Representative and the findings recorded by the adjudicating authority for more than one reason. Firstly, it is the fact that the inter unit clearance from EOU to DTA are not exempted from payment of sales tax by the State Government by any notification and revenue unable to bring on record any notifications issued by the State Government or otherwise to indicate that inter unit transfers from EOU to DTA are exempted. It is an admitted fact that whenever there is an inter unit transfer, it is not sales transacations and hence the sales tax/CST/VAT may not get attracted does not mean ipso facto, it is an exemption granted by the State Government. In the absence of any notification granting exemption for specified products by the State Government from levy of sales tax on the finished goods cleared from 100% EOU, it would be incorrect to hold that the goods were exempted from sales tax, more so when the appellant has discharged the sales tax on the same products which were cleared to independent buyers. Secondly, we find that the lower authority seems to have been guided by the argument that....
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....ther should be taken into account or not while answering such a reference, Larger Bench has held that the assessee in that case was availing sales tax exemptions in respect of sales from their unit located in the notified backward area, as has been specified in the order of exemption granted to them by the State Government of U.P. It would be not out of place to note that the State Government of U.P. had specifically granted exemption from leviable of sales tax on the goods which were manufactured in a notified area, hence the Larger Bench came to the conclusion that for discharge of excise duty, the SAD has to be included. The terms of reference to the Larger Bench being totally different than the facts of the issue which is raised in these appeals; in our view the reliance placed by the Revenue on the ratio of the Larger Bench decision will not carry their case any further." The ratio of the above decisions squarely applies to the present case as majority of the goods are supplied on stock transfer basis. Therefore, the demand on account of special additional duty are set aside. 30. As regards the demand of educational cess and higher secondary education cess thrice while calcu....
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....cess on education cess. In fact this is not permissible from very mode of this levy as prescribed in Section 91 of the Finance Act, 2004 and Section 136 of the Finance Act, 2007, as when a new tax is introduced as surcharge on the existing levies, the base on which the new levy as surcharge is to be calculated will include only the existing levies, not the new levy. If the Revenue's stand is accepted, and on the sum of Basic customs duty and Addl. Customs duty, first "cess on imported goods" under Section 94 of Finance Act, 2004 and Section 139 of Finance Act, 2007 is charged as duty of customs and on the aggregate of duties of customs, "cess on excisable goods," under Section 93 of Finance Act, 2004 and Section 138 of Finance Act, 2007 is charged, it would amount to charging education cess on education cess for which there is no sanction in law. Apex Court in case of Jain Brothers v. U.O.I., reported in (1970) 77 ITR 107 has held that there can be no objection for double taxation if the legislature has distinctly enacted it, but while interpreting general words of taxation, the same cannot be so interpreted as to tax the subject twice over to the same tax. In our view, it is this ....