TaxTMI 
TaxTMI 
2015 (12) TMI 591
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....w materials for manufacture of final products. 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 appe....
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....nts were submitted before adjudicating authority in the form 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. Lt....
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....P. Ltd. 2003 (156) ELT 917 (Tri.-Mumbai) (vi) Exide Industries Ltd. Vs CC Mumbai 2010 (252) ELT 447 (Tri.-Mumbai) 9. He further submits that in respect 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.) ....
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....y in correlating finished goods and the raw material used in the manufacture of such goods. Since the statement was not retracted therefore same is relevant The adjudicating authority has rightly denied the benefit of exemption notification. 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 t....
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.... have carefully considered the submissions of both sides and examined the records. There is no dispute that appellants are registered as an EOU from 22.4.2004 and exporting the Bulk drugs and also clearing in DTA sales to unrelated persons and on stock 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 ....
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....accordance with the provisions of Export and Import Policy and subject to the relevant conditions specified in the Annexure to this notification, and referred to in the corresponding entry in column (5) of the said Table, from so much of the duty of excise leviable thereon under section 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 Dome....
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....under :- Lot Number 183RI40654 Quantity Issued 45,660 Kgs. Goods Inward Memo No. (GIM No.) 183RR40365 The next column clearly shows Supplier's name as Nandlal Bankatlal Pvt. Ltd. and the last column of the report also shows the Supplier Invoice No.0602. It is evident from this E.R.P report that 100 kgs. of this input Pyridoxine 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 g....
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....e quantity manufactured and sold in DTA etc. The jurisdictional officers would thus need to satisfy themselves that the goods under DTA sale have been manufactured wholly out of indigenous raw materials. The Circular referred to above even enjoins the jurisdictional officers to get the input-output norm fixed by the Cost Account so as to ensure that imported inputs, if common, 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 implemen....
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....ugs cleared in DTA. For the reasons already explained above, the adjudicating authority is free to use the departmental audit source or engage special audit under section (14A) or any mechanism as deem fit. Accordingly, the confirmation of demand in Appeal No.E/18/2008 in so far as denying the benefit of exemption Notfn No.20/2003 Condition No.(3) is set aside and remanded to the 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 t....
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.... rely Tribunal's decision in the case of Micro Inks Vs CCE (supra) and in the case of VVF Ltd. Vs CCE (supra) wherein the coordinate Bench of the Tribunal had held that when the goods are transferred to their unit on stock transfer it cannot be said that sales tax is exempted so as to deny the benefit of exemption. The relevant portion of Tribunal's order in the case of Micro Inks (supra) is reproduced 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 ....
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....reliance on the ratio seems to be erroneous since the question which was raised before the Larger Bench was not the question that is before the Bench in the proceedings in these appeals. The Larger Bench was specifically referring to the issue which was in respect of a 100% EOU availing sales tax exemption, for determining the Excise duty payable on aggregate value of customs duty by inclusion of SAD, whether 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....
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....measure of education cess and S&H cess in respect of excisable goods and imported goods respectively, specifically provide that the aggregate of duties of excise or aggregate of duties of customs levied by the Central Government in the Ministry of Finance (Deptt. of Revenue), on which this cess is to be levied as surcharge, would not include the education cess and S&H cess. Thus, the intention of the legislature was never to charge education 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 char....