TaxTMI 
TaxTMI 
2016 (9) TMI 785
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....m, for further use in the manufacture of other products. As the value of the product was provisional, the Assistant Commissioner of Central Excise, Pondicherry, vide letter C.No.V/Ch-22/17/31/94-VC, dated 17.10.1994, ordered for provisional assessment, on the grounds that price of comparable goods should be adopted and further details were required, for arriving at the manufacturing cost of the product. The respondent was issued with notices dated 16.03.1995, 13.02.1996, 17.02.1997 and 21.05.1997 respectively, proposing finalisation of the provisional assessment for clearances made during various periods, on the basis of comparable goods manufactured and sold by M/s EID Parry (I) Ltd. 3. After due process, the Assistant Commissioner of Central Excise, Cuddalore Central Excise Division, vide Order-in-Original No.30/1998 dated 22.05.1998, dropped the proposal to adopt the price of comparable goods, under Rule 6b(i) of the Central Excise (Valuation) Rules, 1975 and ordered that the value should be arrived at, in terms of Rule 6b(ii) of the Rules. The Assistant Commissioner also observed that, "In this connection I also peruse the copies of the CA certificate and I find tha....
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....aria Ltd., reported in 1996 (81) ELT 676. 7. The Tribunal remanded the matter, on the ground that the Superintendent has not given the respondent, an opportunity of hearing, before directing them to pay the differential duty and also directed the Superintendent to consider the submission of the assessee and the decision made in Dai Ichi Karkaria Ltd., reported in 1996 (81) ELT 676. 8. According to the appellant, the Tribunal, while remanding the matter, failed to consider the fact that the Superintendent was not the proper authority to finalise provisional assessment, under Rule 9(B) of the erstwhile Central Excise Rules, 1944 and that the Tribunal has not addressed the question, as to whether, an appeal against the Superintendent's letter is maintainable or not, in the absence of any challenge to the Assistant Commissioner's order. Therefore, an application for rectification of mistake, in terms of sub-section (2) of section 35C of the Central Excise Act, 1944, was filed in E/ROM/62/2010. However, the said application came to be disposed of, vide Misc Order No.371/2011, dated 25.07.2011, observing that there was no mistake apparent from the record. 9. Being aggrie....
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....sing provisional assessment, had not been challenged and consequently, the same has attained finality. Though the Tribunal has set aside the Order of the Commissioner (Appeals), it does not have the effect of setting aside the order of the Assistant Commissioner, as the Assistant Commissioner's order, not being the subject matter of appeal, has not merged with the Commissioner (Appeals) order. Further, as the Assistant Commissioner's order has neither been challenged nor set aside by any judicial / quasi judicial authority, and therefore it is still operative. 13. The appellant further submitted that the Tribunal has remanded the matter to an authority, who is not empowered to issue any orders for finalisation of the provisional assessment and he is also bound by the directions, passed by the Assistant Commissioner. Unless the Assistant Commissioner's order is challenged and set aside, the Superintendent cannot be directed to consider the judgment in Dai Ichi Karkaria's case. Directions given in the Assistant Commissioner's order, is still valid and operative, and therefore, there is an error apparent from the record, and in such circumstances, the Tribunal o....
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....perintendent of Central Excise has passed an order dated 20.11.98, determining the differential duty by including the duty element in the cost of raw materials. Since the Assessee/respondent was not put on notice before the demand was made by the Superintendent, on 25.12.98, the respondent wrote to the Superintendent of Central Excise stating that the duty element on the raw materials, availed as MODVAT credit had wrongly been included, while arriving at the cost of raw material. The Superintendent of Central Excise responded to this letter by way of an endorsement to the same letter, calling for reasons for non-inclusion of input duty in the cost of denatured spirit. In response to this query of the superintendent, the respondent clarified, by letter, dated 22.01.1999, that as per the CEGAT larger bench decision in the Dai Ichi Karkaria case, the duty element on the inputs is not required to be taken as a part of the cost of raw material and if the department did not agree to this, due process of law should be followed. However, the Superintendent of Central Excise passed an order dated 05.02.1999, communicating that the decision of the Assistant Commissioner with respect to the l....
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....f Central Excise duty payable on denatured ethyl alcohol cleared by them for captive consumption, being the value of comparable goods in terms of Rule 6(b)(i) of Central Excise (Valuation) Rules, 1975 and consequently, to reassess the duty on goods cleared and pay the difference, if any in terms of Rule 173(4) of Central Excise Rules, 1944. Subsequently, vide Order-in-Original No.30/98 dated 22.05.1998 has been passed by the Assistant Commissioner of Central Excise, Cuddalore Division, whereupon, the proposal to adopt the price of comparable goods under Rule 6(b)(i) of Central Excise (Valuation) Rules, 1975 has been dropped. Setting out the reasons for dropping the proposals to adopt the price of comparable goods, the Assistant Commissioner of Central Excise, Cuddalore Division vide order dated 22.05.1998 ordered as here under: " In view of the above facts and circumstances of the case, I hold that the DNS manufactured and cleared by the assessee to their own unit at Mettur Dam and the DNS manufactured and cleared by M/s.EID Parry (I) Ltd., Nellikuppam to IMFL and others are not comparable goods of same kind and quality so as to arrive at the assessable value in terms of R....
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....be assessed and of the comparable goods; (ii) If the value cannot be determined under sub-clause (i), on the cost of production or manufacture including profits, if any, which the assessee would have normally earned on the sale of such goods; 21. Pursuant to the directions of the adjudicating authority, namely, the Assistant Commissioner of Central Excise, and by observing that as per the details available in the findings and discussions, and in working out the cost of duty element on the inputs used is not included, and the same should be included for the purpose of arriving at the cost, and taking note of the declared cost/KL, Final cost/KL for the years 1994-95, 1995-96, 1996-97, 1997-98, the Superintendent has computed the differential cost at Rs. 1,14,29,086/-. The Superintendent, vide letter dated 20.11.1998 has requested the respondent to pay the above said differential duty for the Financial Year 1997-98 within one week. Along with the letter dated 20.11.1998, he has also enclosed the working sheets. 22. Material on record further discloses that being aggrieved by the same, the respondent has filed an appeal to the Commissioner of Central Excise, Puducherry. ....
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....o the respondent/assessee, by the Assistant Commissioner of Central Excise, Pondicherry, by issuing show cause notices and that the assessee has also given opportunity to produce all the evidences intended to rely, in support of the defence, in the adjudication. The assessee was also informed to indicate as to whether they should be heard in person also. Responding to the above, written submissions were made and personal hearing was also given on 18.02.1998, and in such circumstances, no opportunity of hearing by the Superintendent is required. 25. Perusal of the order in original shows that the respondent/assessee has also pleaded for accepting the cost construction declined by them under Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975 and pleaded dropping of further proceedings. After extracting the summary of the reply, and the material on record, the Assistant Commssioner of Central Excise, Cuddalore, vide order in Original No.30/98 dated 22.05.1998 has ordered as hereunder: " On transfer of files consequent on bifurcation of Central Excise division, Pondicherry, a personal hearing was held on 18.2.98 Shri. R.Seshadri, Executive Manager (Accounts) of M/s....
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....evant factors. (b) Where the excisable goods are not sold by the assessee but are used or consumed by him or on his behalf in the production or manufacture of other articles, the value shall be based - (i) on the value of the comparable goods produced or manufactured by the assessee or by any other assessee: Provided that in determining the value under the sub-clause, the proper officer shall make such adjustments as appear to him reasonable, taking into consideration all relevant factors and, in particular, the difference, if any, in the material characteristics of the goods to be assessed and of the comparable goods; (ii) If the value cannot be determined under sub-clause (i), on the cost of production or manufacture including profits, if any, which the assessee would have normally earned on the sale of such goods; (c) Where the assessee so arranges that the excisable goods are generally not sold by him in the course of wholesale trade except to or through a related person and the value cannot be determined under the clause (iii) of the proviso to clause (a) of sub-section (1) of section 4 of the Act, the value of the goods so sold sha....
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....er the Jurisdictional Superintendent has to provide an opportunity of hearing, this court deems it fit to consider few decisions on the principles of natural justice. 31.1 In Madhya Pradesh Industries Ltd., v. Union of India reported in AIR 1966 SC 671, question considered was whether, under Rule 54 of the Mineral Concession Rules, 1960, framed under the Mines and Minerals Regulation (II) Act, 1957, while deciding the revision application, the revision petitioner, as a matter of right, is entitled to personal hearing. Rejecting the said contention, at Paragraph 10, the Court held as follows: "As regards the second contention, I do not think that the appellant is entitled, as of right, to a personal hearing. It is no doubt a principle of natural justice that a quasi judicial tribunal cannot make any decision adverse to a party without giving him an effective opportunity of meeting any relevant allegations against him. Indeed, Rules 55 of the rules, quoted supra, recognizes the said principle and states that no order shall be passed against any applicant unless he has been given an opportunity to make his representations against the comments, if any, received from the Sta....
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....ry features at pre-decisional stage, unless, viewed pragmatically, it would paralyse the administrative process or frustrate the need for utmost promptitude. In short this rule of fairplay "must not be jettisoned save in very exceptional circumstances where compulsive necessity so demands." 31.4. In Union of India v. Tulsiram Patel reported in AIR 1985 SC 1416, a Constitutional Bench of the Apex Court considered the scope and extent of applicability of the principles of natural justice to administrative action. The Hon'ble Apex Court observed thus, "So far as the audi alteram partem rule is concerned both in England and in India, it is well established that where a right to a prior notice and an opportunity to be heard before an order is passed would obstruct the taking of prompt action such a right can be excluded. This right can also be excluded where the nature of the action to be taken its objects and purpose and the scheme of the relevant statutory provisions warrant its exclusion, nor can the audi alteram partem rule be invoked if importing it would have the effect of paralysing the administrative process or where the need for promptitude or the urgency of tak....
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.... not, require an opportunity of being heard. It depends upon the nature of the right. Infringement and consequence thereof, may require the court to interpret a provision and to arrive at a conclusion as to whether an opportunity of being heard or personal hearing, should be provided and read into a provision. Reading of Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975, in our considered view does not mandate the Jurisdictional Superintendent, Central Excise to provide an opportunity of hearing, for computation of duty to be paid by an assessee. In the light of the above discussion and decisions, we are of the considered view that the directions of the Tribunal, to the Jurisdictional Range officer to provide an opportunity of hearing, is not in accordance with the scheme of the Act and the rules framed thereunder, and hence the directions are liable to be set aside and accordingly set aside. 35. The second aspect of the case is whether the directions issued by the Tribunal to the Jurisdictional Superintendent to consider the submission of the assessee, in the light of the decision in Dai Ichi Karkaria Ltd. vs. Collector of Central Excise, Pune, reported in 1996 (81) E.....
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.... Central Government may specify the goods or classes of goods in respect of which the credit of specified duty may be restricted." Rule 57C states that no credit of duty paid on a final product may be allowed if the final product is exempt from the whole of the excise duty leviable thereon or is chargeable to a nil rate of duty. Rule 57D says that the credit of duty allowed in respect of any inputs shall not be denied or varied on the ground that part of the inputs is contained in any waste, refuse, or by-product arising from the manufacture of the final product or on the ground that any intermediate product has come into existence during the course of the production of the final product. Rule 57E says that if the duty paid on any inputs on which credit has been allowed is varied subsequently, the credit allowed shall be varied accordingly by adjustment of the credit account or, if adjustment is not possible for any reason, by cash recovery from or, as the case may be, by refund to the manufacturer availing of the credit. Rule 57F(1) reads thus : The inputs in respect of which a credit of duty has been allowed under rule 57A - (i) may be used in, or in relation to....
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.... material and the final product; that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available. 18. It is, therefore, that in the case of Eicher Motors Ltd. vs. Union of India [1999(106) ELT 3] this Court said that a credit under the MODVAT scheme was as good as tax paid. 19. With this in mind, we must now determine whether the excise duty paid on the raw material should form part of the cost of the excisable product for the purposes of Section 4(1)(b) of the Act read with Rule 6 of the Valuation Rules? ............. ............. 24. We think it is appropriate that the cost of the excisable product for the purposes of assessment of excise duty under Section 4(1)(b) of the Act read with Rule 6 of the Valuation Rules should be reckoned as it would be reckoned by a man of commerce. We think that such realism must inform the meaning that the Courts give to words of a commercial nature, like cost, which are not defi....
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....se, Large Taxpayer Unit, Chennai, the appellant herein has also admitted that the issue on merits has been settled in favour of the Tax Payer, by the Hon'ble Apex Court, in Collector of Central Excise, Pune vs. Dai Ichi Karkaria Ltd reported in 1999 (112) ELT 353 SC and the only issue according to the appellant before the Tribunal to be considered was on technical grounds stating that, the action of the Superintendent, in including the averment of cost specifically mentioned as includible in the Assistant Commissioner's order, is not an appealable order of assessment and therefore, no appeal against his letter dated 20.11.1998, is not maintainable. By observing that there was no mistake in the order, Rectification Application E/ROM/62/10 IN E/695/2003 has been disposed of on 25.03.2011. While doing so, the Tribunal has observed that, it is apparent from the record, the issue has to be decided afresh, and the Range Superintendent is free to consider all the submission and pass orders in accordance with law. As stated supra, decision of the Hon'ble Supreme Court dated 11.08.1999 was not placed before the appellate authority and considered. Had it been placed before the Co....
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....ines of the foregoing questions of law?, It could be seen from the averments made in the rectification petition filed by the department, there is a clear admission on the part of the appellant, that the case of the respondent is covered by the decision of the Hon'ble Apex Court, in Dai Ichi Karkaria's case, on merits, which the Tribunal is bound to take note of and pass suitable orders and the same has been done in this case. Therefore, the Tribunal cannot be said to have committed an error. In the light of the discussion on the applicability of the judgment of the Hon'ble Apex Court, to the facts on hand, and the answer to substantial question of law No.1 as indicated, substantial question of law No.2 is answered, in the negative, against the Revenue. 41. On the third substantial question of law is Whether the appeal filed against the Superintendent's letter O.C.No.1251/98 dated 20.11.1998 issued in pursuance of and in execution of the Assistant Commissioner's Order-in-Original No.30/1998 dated 22.5.1998 is maintainable in view of the Hon'ble Supreme Court judgments in the case of Flock India Pvt. Ltd. reported in 2000 [120] ELT 285 and Priya Blue Indust....
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....ailable in the findings and discussions, in working out the cost if duty element on the inputs used is not included, the same should be included for the purpose of arriving at the cost. In the light of the above, the cost of the Denatured Ethyl Alcohol has been worked out for the financial years 1994-95, 1995-96, 1996-97 & 1997-98 which includes the input duty paid. A comparative chart of the assessable value adopted and the assessable value arrived at on finalisation of the provisional assessment, yearwise, as per Worksheet, it is furnished below: Year Declared Cost / KL Final Cost / KL 1994-95 Rs.16486 Rs.14967.21 1995-96 Rs.16486 & (operative in 13746 different spells) Rs.10441.91 1996-97 Rs.13746 -do- Rs. 7201.10 Rs. 9656 1997-98 Rs. 9656 Rs.14286.61 It may be seen from the above chart that during the financial years, 1994-95, 1995-96, 1996-97, the declared cost which was adopted for the purpose of payment of Central Excise duty while clearing the DNS was more than the Actual cost which includes the duty paid on the inputs and as such no differential duty is payable by yo....
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....ellate Tribunal. 46. Central Excise Officer, as defined in Section 2(b) of the Central Excise Act, 1944 reads as under: (b) "Central Excise Officer" means the Principal Chief Commissioner of Central Excise, Chief Commissioner of Central Excise, Principal Commissioner of Central Excise, Commissioner of Central Excise, Commissioner of Central Excise (Appeals), Additional Commissioner of Central Excise, Joint Commissioner of Central Excise, Deputy Commissioner of Central Excise, Assistant Commissioner of Central Excise or any other officer of the Central Excise Department, or any person (including an officer of the State Government) invested by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963) with any of the powers of a Central Excise Officer under this Act." 47. In the case on hand, it is the decision of the Range Jurisdictional Superintendent, in arriving at the value of the excisable goods, under assessment and differential duty, if any, paid by the assessee, which is put to challenge, by way of an appeal. Adjudicating authority has directed the Superintendent to report compliance. But even before the Adju....