TaxTMI 
TaxTMI 
2016 (5) TMI 1071
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....y) has been imposed upon Appellant M/s.Tata Iron & Steel Co.Ltd.(TISCO), Jamshedpur and penalty of Rs. 50,000/-(Rupees Fifty Thousand only) has been imposed upon Appellant Shri B.Muthuraman, MD of M/s.Tata Iron & Steel Co.Ltd.(TISCO). A penalty of Rs. 20,000/-(Rupees Twenty Thousand only) has been imposed upon Appellant Shri M.K.Jha, Deputy Controller of Accounts of Appellant M/s.The Tinplace Co. of India Ltd. (TCIL). 2. Dr.Samir Chakraborty (Advocate) and Shri Abhijit Biswas (Advocate) appeared on behalf of the Appellants. Dr.Samir Chakraborty (Advocate) argued that Appellant M/s.The Tinplate Co. of India Ltd.(TCIL), Jamshedpur (Job-worker) is getting Hot Rolled (HR) Coils from M/s.TISCO, which are converted into Full Hard Cold Rolled (FHCR) Coils by the job-worker. That after detailed investigation a Show Cause Notice was issued to the Appellants on the grounds that duty for the period after 01.07.2000 was required to be paid at 115% of the cost of production of FHCR Coils at the hands of M/s.TCIL under Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. It is the case of M/s.TCIL that Appellant is a job-worker and not a sister conce....
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....nd emphasized that these facts were brought to the notice of the Adjudicating authority as per Para-14 of their reply to the Show Cause Notice dated 17.06.2002. Ld.Advocate also made the Bench go through the relevant conversion agreement where such a yield has been fixed at 92% but also mentions that yield shall be calculated on actual basis and is open to review. That in view of the variable nature of yield percentage Adjudicating authority has wrongly confirmed demand by taking yield percentage as 92%. 4. Ld.Advocate also argued that demand with respect to inward freight incurred on raw materials and outward freight incurred on the finished goods sent to M/s.TISCO have been added to arrive at the assessable value. It is the case of the Appellant that outward freight incurred for transporting finished goods is not required to be added to the assessable value and the excess duty demanded on such inclusion of outward freight comes to Rs. 17.00 Lakhs (approx.) which is not demandable. That another demand of Rs. 2.00 Lakhs (approx.) has been demanded excess in the Show Cause Notice which is due to calculation errors. 5. On the issue of imposition of penalties Ld.Advocate relied ....
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....00 Lakhs has been demanded excess due to calculation errors? 5) Whether penalties have been correctly imposed upon the Appellants? 8. So far as the issue mentioned at point No.1 of para-7 above is concerned Apex Court in the case of Commissioner of C.Ex., Goa vs. Cosme Farma Laboratories Ltd. (supra) has held that valuation of goods manufactured on job-work basis has to be done as per CBEC CircularNo.619/10/2002-CX dated 19.02.2002 and Apex Court's decision in the case of Pawan Biscuits Co. (Pvt.) Ltd. v. Commissioner of Central Excise, Patna (supra). Further in the case of Commissioner of C.Ex., Pune vs. Mahindra Ugine Steel Co.Ltd. (supra) it has been opined by the Apex Court that Rule 8 of the Central Excise Valuation Rules is not applicable to the goods manufactured on job-work basis and that valuation has to be done under residuary provision of Rule 11 of the Central Excise Valuation Rules. In the present case job-worker M/s.TCIL is not a sister concern of M/s.TISCO and the goods manufactured by the job-worker are not used captively by him or on his behalf (job-workers behalf) in the production or manufacture of other articles. In view of the above observations an....
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....ority for quantifying the demand, if any, based on Cost Accountants Certificate to be produced by the Appellant before the Adjudicating authority. 11. So far as imposition of penalties upon the Appellants is concerned, it is observed that Appellant M/s.TCIL was aware of the fact that cost of raw materials supplied by M/s.TISCO was on a higher side. M/s.TCIL took up the matter with M/s.TISCO regarding calculating duty liability based on higher value of raw materials supplied. This correspondence regarding payment of duty at higher cost of raw material supplied with M/s.TISCO was also initiated only after department started investigating into the matter. At that stage Appellant M/s.TCIL was required to approach the department as soon as they realized higher cost of raw material supplied. Accordingly penalty is required to be imposed upon the Appellant only under Rule 173Q of the Central Excise Rules, 1944. Bench is of the considered view that excess duty, if any, paid by the Appellant would be admissible as Cenvat Credit to M/s.TISCO, therefore, there cannot be any intention to evade payment of duty for attracting imposition of penalty under Section 11AC as held by CESTAT Delhi i....