TaxTMI 
TaxTMI 
2020 (1) TMI 894
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.... P Fabricators Pvt Ltd., A-417, TTC Industrial Area, MIDC, Mahapa, Navi Mumbai under Section 11A(4) of the Central Excise Act, 1944. However I reduce the demand to the extent of Rs. 8,39,41,110/- (Rupees Eight Crore Thirty Nine Lakhs Forty One Thousand One Hundred and Ten Only) out of the total demand of Rs. 8,39,55,676/- (Rupees Eight Crore Thirty Nine Lakhs fifty Five Thousand Six Hundred and Seventy Six Only) only on the grounds of the duplication of demand as discussed in para 17 & 18 of the order. Hence, the balance confirmed amount is Rs. 14,500/- (Rs Fourteen Thousand Five Hundred Sixty Six Only) 24. I order for recovery of interest at appropriate rate under Section 11AA of the Central Excise Act, 9144 on the duty amount confirmed above from S P Fabricators Pvt Ltd., A-417, TTC Industrial Area, MIDC, Mahapa Navi Mumbai. 25. I impose a penalty equivalent to the amount of demand confirmed of Rs. 14,566/- (Rs Fourteen Thousand Five Hundred Sixty Six Only) upon M/s S P Fabricators Pvt Ltd., A-417, TTC Industrial Area, MIDC, Mahapa Navi Mumbai under Section 11AC(1) (c) of the Central Excise Act, 1944." 1.2 Appeal No E/85261/2016-DB arising out of order in ori....
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....ice forms a part of demand of Rs. 11,50,80,441/- which was confirmed vide OIO dated 30.10.2015. The same is illustrated in the following table. Sr No Period Amt of demand involved in the SCNs confirmed vide OIO dated 30.10.2015 Amount of demand in the present SCN Remarks, whether overlapped or not 1 2008- 09 3,11,39,331/- - Not overlapped since the period is not covered in the present SCN 2 2009- 10 4,76,24,804/- 4,76,24,804/- Overlapped 3 2010- 11 1,58,11,649/- 1,58,11,649/- Overlapped 4 2011- 12 1,03,05,166/- 1,03,05,166/- Overlapped 5 212- 13 1,01,99,491/- 1,01,99,491/- Overlapped Total 11,50,80,441/- 8,39,41,110/- 2.1 Appellants are engaged in providing works contract service which includes supply of Aluminium door & window and installation of the same at the Customer premises. The goods used for providing the service are manufactured at the appellants factory at Mahapa, Navi Mumbai. 2.2 The goods are valued by the Appellants in terms of Rule 8 read with Rule 11 of Central Excise Valuation Rules, 2000 as these goods are not sold independently and the cont....
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....llant learned Counsel submitted- • Confirmation of demand of Rs. 11,50,80,441/- when the show cause notice was for Rs. 69,23,028/- is beyond the provisions of Section 11A of Central Excise Act, 1944; • While the Show Cause Notice was issued demanding duty in respect of transportation charges from their premises to the customer premises in term of Section 4(1)(a) read with Rule 5 of Central Excise Valuation Rules, 2000, the demand has been confirmed by invoking the Rule 8 of Central Excise Rules, 2000 on the basis of Cost Audit report prepared by the J D Cost. Hence the order dated 03.10.2015 has travelled beyond the scope of show cause notice and is bad in law as per following decisions:- • Ballarpur Industries Ltd [2007 (215) ELT 489 (SC)] • Brindavan Beverages 9P) Ltd [2007 (213) ELT 487 (SC)] • Precision Rubber Industries 9P) Ltd [2016 (334) ELT 577 (SC)] • Reliance Ports and Terminals Ltd [2016 (334) ELT 630 (Guj)] • R K Construction [2016 (410 STR 879 (T-Mum)] • Drishty Communication Pvt Ltd [2018 (10) TMI 1326-CESTAT-AHMD] • Once Commissioner determines that Se....
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....lves valuing the goods under Rule 8 read with Rule 11 of the Central Excise Valuation Rules, 2000, and when it came to the notice of Commissioner that certain elements of Cost have not been included in the value so determined he referred that matter to Joint Director Cost, for undertaking the costing audit and determine the correct value. It was on the basis of the cost audit report that the demands have been made in against the appellants. 4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of arguments. 4.2 By the Adjudication order dated 03.10.2015/ 04.11.2015 subject matter of the Appeal No E/85261/2016-DB, Commissioner was adjudicating the Show Cause Notice dated 27.11.2016. The para 5, 6 and 7 of the Show Cause Notice are reproduced below: "5. It therefore appears that the assessee have undervalued the said goods which resulted in short payment of Central Excise Duty in contravention of the provisions of Section 4(1)(a) of the Central Excise Act, 1944 read with Rule 5 of Central Excise Valuation (determination of Price of Excisable Goods) Rules, 2000 and Rule 4 read with Rule 8, Rue 6 of Central Excise Rule....
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....March 2013 as detailed in Annexure "A" to the Show Cause Notice. 7. Now, therefore, the said assessee is hereby required to show cause to the Commissioner of Central Excise, Belapur Commissionerate, having his office situated at 1st Floor, CGO Complex, CHD Belapur within 30 days from the receipt of this notice as to why:- a) The Central Excise duty of Rs. 69,33,038/- (Rs Sixty Nine Lakhs Thirty Three Thousand and Thirty Eight only) ( Basic 67,21,395, Edu Cess 1,34,429/-, SHEC 67214/-) short paid by the assessee as shown in detail in Annexure A to the Show Cause Notice, for the period November 2008 to March 2013 should not be demanded and recovered from them under proviso to Section 11(A)(1) (Now Section 11A(5) w.e.f 08.04.2001) of the Central Excise Act, 1944. b) Interest under Section 11AB (Now Section 11AA) w.e.f 08.04.2001) of the Central Excise Act, 1944 should not be demanded and recovered from them. c) Penalty should not be imposed upon them under the provisions of Section 11AC (Now Section 11AC(1)(a) w.e.f 08.04.2001) of the Central Excise Act, 1944 and / or Rule 25 of Central excise Rules, 2002." 4.3 In para 46 of his Order, Adjudicati....
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....some expenditure, regarding the cost of production and excise duty liability for the period 2010 to 2012-13, which is as under- 1. 2008-09: Rs. 3,11,39,3311-(Pre-revised) 2. 2009-10: Rs. 4,76,24,804/-(Pre-revised) 3. 2010-11; Rs. 1,58,11,649/- (Revised) 4. 2011-12: Rs. 1,03,05,166/- (Revised) 5.2012-13: Rs. 1,01,99,4911- (Revised) Total: Rs. 11,50,80,4411- 53. I find here that, in the instant case, initially issue of undervaluation was restricted to the non-inclusion of transportation cost from transportation of goods from factory to sites. The CAS 4, Trial Balances and various information/documents submitted by the assessee have been verified by the J.D. Cost and he has submitted his report after taking into consideration all the elements of cost of production and submitted his verification report regarding the differential duty liability. Accordingly, the duty liability in the matter has been enhanced from Rs. 69,23,038/- to Rs. 11,50,80,441/- for the period Nov.2008 to March-2013 in respect of SCN No. V/Adj(SCN)15-105/Commr/2013/Bel dated 27/09/2013. 57. I find that the assessee's senior representatives have participated ....
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.... Nov-2008 to March- 2013." 4.4 We are not in agreement with the approach of the Commissioner in enhancing the demand amount beyond the amount specified in the show cause notice. It is settled principle in law that show cause notice defines the four corners of the proceedings in which they need to be conducted. Hon'ble Supreme Court has in case of Ballarpur Industries [2007 (215) ELT 489 (SC)] clearly sated the law as follows: "21. Before concluding, we may mention that, in the present case, the second and the third show cause notices are alone remitted. The first show cause notice dated 21-5-1999 is set aside as time-barred. However, it is made clear that Rule 7 of the Valuation Rules, 1975 will not be invoked and applied to the facts of this case as it has not been mentioned in the second and the third show cause notices. It is well settled that the show cause notice is the foundation in the matter of levy and recovery of duty, penalty and interest. If there is no invocation of Rule 7 of the Valuation Rules 1975 in the show cause notice, it would not be open to the Commissioner to invoke the said rule." In case of Gas Authority of India Ltd [2008 (232) ELT 7 (SC)], ....
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....the order in that respect. However after setting aside the said demand we remit the matter back to Commissioner for fresh adjudication of the show cause notice on the grounds and amount for which the same was issued. 4.6 In respect of the second show cause notice dated 19th August 2015 subject matter in appeal No E/87109/0216-DB, the demand has been made on the following grounds: "6. Therefore, it appears that the assessee failed to arrive at correct assessable value as per the provisions laid down under Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 read with Rule 4 and Rule 6 of Central Excise Rules, 2002 for the semi finished goods cleared to their sister units at Bangalore and Chennai which was further used for captive consumption by them in the manufacture of finished goods and has resulted in short payment of duty. The CAS-4 verification reports were received from the JD (Cost) Central Excise, Mumbai Zone-II vide his letter No.JDC/BELAPURISP Fab/CAS-4/2014/368 dated 19.12.2014 and on 05.05.2015. 7. In terms of the Section 3 of the Central Excise Act, 1944 read with Section 4 of the Central Excise Act, 1944 the d....
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....ment of duty which are captively consumed by them. As such the assessable value of the goods has to be arrived at as per proviso to Rule 9 read with Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods), Rules, 2000 on the basis of CAS 4 Certificate. To ascertain the correctness of assessable value on which duty is paid at the time of clearance of the goods assessee was asked to submit the CAS 4 Certificates in respect of the relevant period. But assessee failed to submit the same to the Audit Officers. Hence Divisional DC/AC was requested to verify this aspect of valuation by obtaining product-wise CAS 4 from the assessee for the Mahape unit and to take the necessary action to safeguard the Govt. revenue, if any discrepancies are noticed. 14. Therefore, CAS4 certificates and trail balance for the period Dec.2008 to March 2013, FOR Mahape unit submitted by the assessee were forwarded to J.D. (Cost) and made a request to verify the same and ascertain the correctness of the same in order to verify the genuineness of the practice of valuation adopted by the assessee in respect of clearances to their sister units as pointed out by the Audit Officer....
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....SCN is restricted to the issue of inclusion of transportation cost from the factory up to the sites. It is also worthwhile to state that, the J.D. Cost's verification report lead to the enhancement of duty liability over and above the demand notice under consideration, since the assessee is associated during the entire course of verification process and there was no objection raised by them in anticipation impending enhanced duty liability. Hence it is opined that, the Principal of Natural Justice has been adequately observed by associating the assessee in the entire process and handing over the communication, report originating from J. D. Cost. Therefore, I hold that the entire process constitutes the process akin to issuance of Show Cause cum Demand Notice for determination of duty liability. In view of my above discussion, I find that in respect of undervaluation arising out - of non-inclusion of various elements including transportation cost of the goods transported from factory to sites in the cost of production, based on the verification report given by the J.D. Cost, there is no need to issue separate Show Cause cum Demand notice to the assessee in the ....