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2017 (3) TMI 554
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....d for conversion, i.e. the cost of entire raw materials used was not included in the value of the goods; only the cost of raw materials contained in the final products was included in the value excluding the cost of burning losses etc.; (ii) Cost of transportation of raw materials from the principal supplier (KSL) to factory premises of job worker (GIL), not included in the value of the goods; (iii) Differential duty appeared to be payable on account of non-inclusion of raw material cost and transportation cost [(i) and (ii) above], which worked out to Rs. 1,73,40,743/-; (iv) GIL had cleared more quantity than reported in ER-1 returns. During 2003-04 to 2005-06, they had shown lesser quantity of clearances in their ER-1 returns. The difference between the quantity declared in the ER-1 Returns for the said period and the particulars given by them in their letter dated 03.08.06 is 232.835 MT; it appeared that these were undeclared excess clearances resulting in short payment of duty of Rs. 8,35,693/-. 4. Accordingly, a show cause notice dt. 07.05.2007 was issued inter alia proposing total demand from GIL of differential central excise duty of Rs. 1,81,76....
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.... therefore there was no need to include such cost separately. (g) with regard to allegation of unaccounted clearances of CTD bars/rounds, department has not brought on record any evidence to corroborate the details submitted by Shri J.Balaji, their Excise Manager, nor has any statement been recorded from him or any other person. 7. In respect of Appeals No.E/790/2007 & E/791/2007, appellants therein have contended that penalty under Rule 26 of the Central Excise Rules, 2002 cannot be imposed since the said rule presupposes the existence of ingredient of confiscation under the Act or the Rules of which there is no specific allegation in the SCN. 8. On behalf of Revenue, Shri A. Cletus, Ld.A.R reiterated the correctness of the impugned order. 9. Heard both sides and have gone through the facts and records of the matter. The contentious issues which have been brought up in these appeals are analyzed hereinbelow : 10. Demand with respect to non-inclusion of actual cost of the raw material received and consumed by appellant for conversion: As per the Conversion Agreement between KSL and GIL, the former would supply the latter raw materials (MS ingots) for conversion....
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....rence to their value, then, on each removal of the goods, such value shall - (a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value; (b) in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed. Explanation. For the removal of doubts, it is hereby declared that the price-cum-duty of the excisable goods sold by the assessee shall be the price actually paid to him for the goods sold and the money value of the additional consideration, if any, flowing directly or indirectly from the buyer to the assessee in connection with the sale of such goods, and such price-cum-duty, excluding sales tax and other taxes, if any, actually paid, shall be deemed to include the duty payable on such goods. Rule 6 of Central Excise Rules, 2002 Assessment of duty - The assessee shall himself assess the duty payable on any excisable goods : Provided that in case of cigarettes, the Superintenden....
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....ransport charges, loading charges and all other incidental charges in connection with lifting of raw material from principal factory". It is well settled that for the purpose of arriving at assessable value at the job worker's end, cost of transportation of raw material between the principal and the job worker shall form a component for the purpose of arriving at the cost of raw materials. This requirement was reiterated by the CBEC Circular No.643/34/2002-CX. dt. 01-07-2002 which inter alia clarified that cost of transporting raw materials/inputs to the premises of job work will also be added to determine the cost of raw material/input. The relevant portion of the circular is reproduced below : Sl.No. Points of doubt Clarification 11. How will valuation be done in cases of job-work? Please also refer to Board's Circular No.619/10/2002-CX dt. 19.2.2002. Cost of transporting the raw materials/inputs to the premises of the job-worker will also be added to determine the cost of the raw material/input. [1997 (071) ECR 381 (TRIB)] GIL have contended that upto 2003-04, they were incurring cost of transportation of ingots and that the conversion ch....
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....mitted by their own Excise Manager and that statement towards that end has not been recorded from him or any other person. In our view, this contention does not hold any water. Since the discrepancy emerged, as discussed above, based on the declarations/information made/provided by GIL themselves to department, there is no need of further corroborating the same. In the event, here also there is no cause for interfering with the demand of differential duty of Rs. 8,35,693/-. 13. In view of the foregoing discussions, we do not find any cause for interfering with the demands of differential duty totally amounting to Rs. 1,81,76,436/- in the impugned order from GIL under Section 11A (2) of the Central Excise Act, 1944 along with interest liability thereon under Section 11AB of the Act and the appeal on that score will require to be dismissed which we hereby do. 14. GIL have primarily contended that the entire proceedings have been hit by limitation. In particular, they have contended that during the impugned period April 2002 to March 2007, appellants were subjected to various periodical inspections/audit by departmental officers and that officers had scrutinized the records and ....
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....enalty on him under Rule 26 is illegal and improper. Appellant also contends that he was not directly connected/concerned/involved with the payment of Central Excise duty or Central Excise procedures to be followed in the manufacture of clearances of impugned goods by GIL. To understand the contention of the appellant, it would be worthwhile to reproduce Rule 26 ibid as it existed at the relevant time : RULE 26 Penalty for certain offence. - Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or rupees ten thousand, whichever is greater. A plain reading of Rule 26 will indicate that imposition of the penalty therein is not tied to a conditionality that excisable goods have to be placed under confiscation under the Act/Rules. On the other hand, what the rule propounds is that a person who is involved either directly or indirectly, by way of possession, or transp....