TaxTMI 
TaxTMI 
2019 (9) TMI 1542
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....d cuttings of BOPP films etc., at different stages of production. The waste so generated is a dutiable product, falling under CH 3915 of CET. 2. The Appellant are selling a part of such waste to independent customers on payment of excise duty on "Transaction Value" and the balance quantity is captively consumed within the factory on payment of excise duty on "Transaction Value" for manufacture of exempted Re-processed Granules (RPG) which in turn is used in the manufacture of BOPP Film on which appropriate excise duty is paid at the time of clearance. The appellant are also selling the exempted RPG in the open market on payment of appropriate amount in terms of Rule 6 of Cenvat Credit Rules as they are not maintaining separate account in respect of waste used in the manufacture of exempted RPG which is cleared in the open market as also the RPG which is used captively in the manufacture of dutiable BOPP Film. 3. It is submitted that there is no dispute between the Appellant and the department in respect of the duty paid on "transaction value" in respect of the waste sold to independent customers in terms of Sec. 4(1)(a) of the Act ibid. However, the department since J....
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....e. However, the department continue to issue 9 show cause notices for the subsequent periods 1-7-2000 to March, 2003, March, 2004 to December, 2004, February, 2006 to December, 2010 and January, 2011 to July, 2015 involving a total demand of Rs. 29,87,88,745/- on the very same ground as covered by the aforesaid 2 orders passed by the Commissioner and the Tribunal. 7. At this stage it is submitted that prior to 1-12-2013, Rule 8 of the said Rules provided that where the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value shall be 115%/110% of the cost of production or manufacture of such goods. However, w.e.f. 1-12-2013, the said Rule was amended by Notification No. 14/2013-C.E. (N.T.), dated 22-11-2013 (Annexure) to provide "where whole or part of the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value of such goods that are consumed shall be one hundred and ten per cent of the cost of production or manufacture of such goods. Thus w.e.f. 1-12-2013, in terms of th....
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....hat the Tribunal vide their order dated 22-5-2008 has also taken this as one of the grounds to dismiss the departmental appeal. (B) Secondly, the Appellant submitted before the Commissioner, that the issue in question is settled once and for all by the CESTAT in favour of the Appellant vide their Final Order No. 319/2008-CX, dated 22-5-2008 [2008 (231) E.L.T. 159 (Tri. - Del.)] wherein the Tribunal had dismissed the Departmental Appeal for the period January, 2005 to June, 2005. In their said order, the Tribunal had relied on their earlier decisions on the identical issue in the case of Avon Tubes Ltd. v. CCE, Ludhiana reported in 2004 (117) ECR 616 and Steel Complex Limited v. CCE, Calicut reported in 2004 (171) E.L.T. 255. The 3rd appeal filed by the department in the Supreme Court against the CESTAT order dated 22-5-2008 was also dismissed by the Apex Court vide order dated 19-2-2016 on the ground that "tax effect is low" [2016 (337) E.L.T. A139 (S.C.)]. (C) At this stage, it is pertinent to point out that the decision of the Tribunal in the case of Steel Complex Limited, which was relied on by the Tribunal in their order dated 22-5-2008 in Appellant's case, was up....
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....has to be done on the basis of Rule 4, namely, at the price at which the identical goods were sold to independent buyers. The Larger Bench has also noted the circular No. 643/34/2002-CX, dated 1-7-2002 which was relied on by the Commissioner in his impugned order. The facts of the Appellant's case is identical to the facts of the case in the case of Ispat Industries Limited. Even though this Larger Bench decision was heavily relied on by the Appellant before the Commissioner, he has chosen not to give any finding on this ground as the impugned order is totally silent on this ground. At this stage, it is pertinent to point out that in a recent decision in the case of Commissioner of Central Excise, Aurangabad v. Sterlite Optical Technologies Limited reported in 2018 (359) E.L.T. 723, the Tribunal, by relying on the aforesaid Larger Bench decision in the case of Ispat Industries Ltd., has clearly held that the correct method of assessment would be adoption of the price at which the said goods were sold to independent buyers. The aforesaid Ispat Industries Limited Larger Bench decision has been followed by the Tribunal in a number of cases. (G) It is also submitted that the Com....
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....ine the cost of production of waste. Hence the application of the concept of "realized or realizable value" of such waste (which is captively consumed) is the only effective, practical and best method in the circumstances. Also, Chapter-1 of Guidance Note issued by ICAI (the Institute of Chartered Accountants of India) clearly stated that the cost of production of by-product, scrap and waste generated and captively consumed in the manufacture cannot be meaningfully calculated as per normally accepted cost accounting principles and practices. (b) It is, therefore, submitted that even after the amendment to Rule 8 of Valuation Rules, the said Rule cannot be applied to the facts of the Appellant's case in the absence of any reasonable method/manner of calculating/determining the cost of production of captively consumed scrap. Hence, it is submitted that post 1-12-2013 also, the method of assessment of captively consumed goods on the basis of the Transaction value in terms of Rule 4 of Valuation Rules would be applicable to the facts of the case. Without prejudice, equally, even for the perio....
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....s. It is submitted that the Appellant is covered under exception to the proviso of the exemption Notification as they, being a manufacturer of dutiable (BOPP Films) and exempted (RPG) are discharging their obligation under Rule 6 of Cenvat Credit Rules for the entire period, by paying the appropriate amount on the RPG cleared for home consumption under the said rules. This fact of payment of appropriate amount by the Appellant on the RPG cleared for home consumption under Rule 6 of Cenvat Credit Rules has been clearly admitted by the Adjudicating authority in para 4.10 of the Adjudication order. However, the Commissioner has taken the stand that the appropriate amount has been paid only in respect of RPG cleared for home consumption and not in respect of RPG cleared for captive consumption. The Commissioner, with due respect, is completely misinterpreting the provisions of Rule 6 of Cenvat Credit Rules. Rule 6 of Cenvat Credit Rules clearly provides for payment of an amount only in respect of exempted goods cleared for home consumption and not in respect of the exempted goods cleared captively for manufacture of dutiable final product. Further, the Commissioner in the same para has....
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....he normal period, the department cannot allege suppression of fact in the following show cause notices for subsequent periods. (h) It is also a settled principle of law that where a show cause notice has been issued for the normal period, the subsequent show cause notice cannot be issued alleging suppression of fact by invoking the extended period [ECE Industries Limited v. CCE, New Delhi reported in 2004 (164) E.L.T. 236 (S.C.), Nizam Sugar Factory v. CCE, AP reported in 2006 (197) E.L.T. 465 (S.C.) and Caprihans India Limited v. CCE, Surat reported in 2015 (324) E.L.T. 8 (S.C.)]. It is submitted that in the facts of the case, prior to the aforesaid 2 show cause notices invoking the extended period, 3 show cause notices dated 5-5-2004, 1-4-2005, 5-12-2005, were issued to the Appellant for the normal period without invoking the extended period. However, the Commissioner, in para 4.13 of OIO (page 34 of OIO) is taking refuge of the pending Appeal by the department in the Supreme Court which is not at all relevant in view of the settled principle of law as declared by the Supreme Court as stated above. ....