TaxTMI 
TaxTMI 
2019 (5) TMI 1343
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....d after investigation by the department alleging that the assessee have not taken full cost of the raw materials while arriving at the assessable value. They have only taken the price as declared by KHDCL in their price declaration given to the respondents which is lower than the actual price shown in the delivery challans. Therefore, the cost of the raw materials has been suppressed resulting in lowering of assessable value and underpaying of excise duty. Accordingly, the show-cause notice proposed to recover from the respondent an amount of Rs. 28,20,460/- under Section 11 A(1) of Central Excise Act 1944 read with Rule 4,5,6 and 8 of Central Excise Rules 2001. It was also alleged that since they have suppressed the value of the goods they are not entitled to deemed credit under Rule 14 of CENVAT Credit Rules 2002/2004 and an amount of Rs. 63,50,253/- availed under Notification No. 7/2001 (NT) and other notifications was proposed to be recovered. It was also proposed to demand interest under Section 11AB of Central Excise Act read with Rule 14 of CENVAT Credit Rules 2002/04. Further, it was proposed to impose a penalty on them under Section 11AC of the Central Excise Act read with....
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....sals for penalties as set out in the show-cause notice needs to be confirmed. 3. Learned counsel for the respondent on the other hand submits that this issue is no longer res integra and on an identical matter in respect of the same customer namely KHDCL in the case of Sharda Synthetics Ltd Vs Commissioner (Thane) [2016(6)TMI 513 (CESTAT-Mumbai)], the Tribunal has held in favour of the assessee. They being just another processor for M/s KHDCL the same ratio applies to their case as well. 4. On the merits of the case, the learned counsel would reiterate the arguments made in the order-in-original. He took us through the copies of delivery challans and the price lists given by M/s KHDCL and would submit that the difference in prices is on account of 15% transit risk. He further submits that in case any raw material supplied by M/s KHDCL is damaged or not returned, they will be liable to pay to M/s KHDCL an amount equal to what is indicated in the delivery challans. He would argue that price in the delivery challan is meant only for that purpose. Otherwise the price declaration for excise made by M/s KHDCL (a Govt of Karnataka undertaking) should form the basis for central excis....
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....ot actual price of the goods. The actual price of goods may differ. Since there is no sale/purchase between M/s Sanghi and M/s KHDCL there is no actual sales value. A second price is indicated in the delivery challans. 6. Since there is no sale of grey fabric at all, either by M/s KHDCL or by respondent assessee, the value of the raw material becomes relevant only in case the material is damaged by M/s Sanghi and they have to reimburse the cost of the material to M/s KHDCL. This, in our considered view, should reflect the true value of the goods because M/s Sanghi will be making up for any loss on their account at this price. It is undisputed that in case of loss, the price to be paid by M/s Sanghi will be as per the delivery challan price (not as per the price declared in the price declaration). In our considered view, the price in the delivery challan should, therefore, be considered as correct price of the raw material. 7. We also find no evidence whatsoever to justify the contentions in the impugned order that the price in delivery challan is 15% higher than the actual cost of raw materials to cover the transit risk. Neither the delivery challan nor the price declarations....
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.... & Dr. A.R. Lakshmanan, JJ.), it was held that in order to attract the first proviso to Section 4(1)(a) of the Act, there has to be an averment and the proof of the existence of a trade practice in that trade that the goods are being sold at different prices to different class of buyers. This Court, further, held that to claim benefit of proviso to Section 4(1)(a) of the Act, a trade practice must be averred and shown to exist and it must be shown that there is different class of buyers and only on basis of facts averred and proved, a conclusion can be reached that the sale is to a different class of buyers. This is a condition precedent for invoking the first proviso to Section 4(1)(a) of the Act. As already noticed, neither the show cause notice nor the Collector's order nor the CEGAT order makes any such averment let alone proving the same with evidence. On this ground alone the invocation of First Proviso to Section 4(1)(a) of the Act must fail. Further, the first proviso to Section 4(1)(a) specifically states that the sale to different class of buyers should not be to related persons. In view of the specific provision contained in the first proviso to Section 4(1)(a) of th....