TaxTMI 
TaxTMI 
2018 (9) TMI 1572
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.... which manufactures aluminium sheets from coils and supplies to their second and third units at Balanagar and Jeedimetla. The units at Balanagar and Jeedimetla undertake processes known as shearing, punching, welding, lid testing and painting of roll band sheets and supply to their fourth unit at Faridabad in Haryana which in turn undertakes some other processes and clears the goods to their customers. The units in Balanagar and Jeedimetla also sell goods to independent buyers in addition to clearing the goods to their unit at Faridabad. 3. The valuation adopted by these three units viz., AEL at Malkapur, Balanagar and Jeedimetla is as per Rule 8 of Central Excise Valuation Rules meant for captive consumption as they are transferring the goods to their own sister units. The officers of the department visited their unit at Malkapur and examined their cost sheets and found that they had only added the cost of material and process cost but did not add the royalty and technical knowhow fee which they were paying to their Spanish parent company and were also not adding notional profit of 15%. The officers requested the appellant at Malkapur unit to provide details of their cost support....
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....ed orders are Denovo Orders-in-Original passed by the learned Commissioner. The other show cause notices issued to Jeedimetla and the Malkapur units have been adjudicated and the Orders-in-Original have been passed by the Commissioner for the first time. 5. The learned counsel for the appellant took us through their process of manufacture in different units and explained that the demands in Jeedmetla and Balanagar units stem from the demands in Malkapur unit. He submits that since there was a difference between their cost audit report by their cost auditor DPA and the one by the department appointed cost auditor DZR, they approached another cost accountant M/s S.S.Zanwar and Associates (SSZ) to examine the cost of goods manufactured who certified that both reports were wrong and, in fact, the appellant had paid duty at a much higher assessable value than they should have. It is his submission that they had placed the report of SSZ before the learned Commissioner but the demand was confirmed only taking the cost in the audit report done by M/s DZR and penalties have been imposed. As far as their Balanagar unit is concerned, he submits that pursuance to the directions of the Hon'ble....
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....ay also be taken into consideration. The learned Commissioner did not accept it on the ground that it was said to be provisional cost report and he had taken notional capacity of the factory instead of normal capacity. However, these two issues were clarified by SSZ and hence, the learned Commissioner had erred in not taking into consideration report of M/s SSZ. 8. The cost auditor DZR appointed by the department had erred in following ways. (1) Adding the cost of shearing activity on to full sheet products. (2) Apportionment of overheads on different commodities is not correct. (3) Closing work-in-progress was not considered for calculating raw material consumed in 2002-03. (4) The depreciation considered as fixed overhead is being absorbed by lower capacity utilization which is against the cost principles. (5) The total scrap credit was given only to the sheared product which is not correct. 9. With respect to the Balanagar and Jeedimetla units, he submits that the learned Commissioner had erred in not providing them with a copy of the report of the Director (Cost) and in not considering the report of SSZ in calculating the differential duty. The learned Commissioner ....
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.... iii. MIRC Electronics Vs CCE, Thane-I - 2015 (318) ELT 682 (Tri- Mumbai) iv. Alembic Ltd Vs CCE, Vadodara - 2014 (308) ELT 535 (Tri-Ahmd) v. Mercantile and Industrial Dev. Co. Ltd Vs CCE, Ahmadabad - 2014 (313) ELT 553 (Tri-Ahmd) 12. No penalty can be imposed under Rule 26 on the ground that Mr. Deepak Thorat & Mr. Raghu Rama Sharma have failed to guide the unit in complying with the statutory provisions and mislead the department. There is nothing in the show cause notice or in the order to suggest that these individuals were personally and physically involved in removing and transporting the goods which are liable for confiscation. He lastly submitted that as the entire demand is unsustainable they are also not liable to pay interest and penalty proposed to be imposed upon them. 13. The learned Commissioner (AR) agreed with the facts of the case but contested the appeal on the following grounds: (1) The concept of revenue neutrality does not form part of the statute. It is evolved by judicial decisions as a deviation from the statute apparently to meet the ends of justice in particular conditions and hence it is an exception and not a norm. If it has to be exercised it....
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.... duties as well as on seeking revenue neutrality as a ground for not invoking extended period of limitation were on different facts. Therefore, neither the revenue neutrality applies in this particular case nor is the adjustment possible. 16. As far as the question of assessment is concerned it is done on each clearance and duty becomes payable on each clearance, although it is paid at the end of the month. If excess duty is paid on one consignment and short paid on another, the two cannot be set off against each other. The department will have to raise a demand under Sec.11A as applicable to recover the duty which is not paid or short paid. The assessee, on the other hand, is entitled to claim refund of duty paid in excess by following procedure prescribed under Sec.11B. 17. There is no provision in the Central Excise Act to set off excess and short paid duties. Such a concept is being evolved by the Judiciary and Tribunals in specific cases. There is no reason to apply such adjustment in this particular case. 18. In the case of Dharampal Satyapal - 2005 (183) ELT 241 (SC), the Hon'ble Supreme Court has clearly held that revenue neutrality in terms of the ability to claim profo....
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....tly available with the Commissioner before passing the denovo adjudication order. Copies of this report were not made available to the appellant on the ground that it was not a relied upon document. The appellant argues that they have been denied the principles of natural justice in not being provided with the copy of the same. As far as the show cause notice is concerned, it is a well established principle that the day the show cause notice was issued, the clock stops and only the allegations made in the show cause notice and only the documents which were relied upon in the show cause notice can be considered for subsequent adjudication proceedings. It is not open for the department to add additional documents which, in this case the learned Commissioner has correctly not done. We, therefore, find no infirmity in the department not providing them with the copy of the report of the Director (Cost) as it was not a relied upon document in the show cause notice. As far as the report by M/s SSZ is concerned, it was also not relied upon document but it was used as defence by the appellant before the adjudicating authority and for the reasons recorded therein, he did not agree with the s....