TaxTMI 
TaxTMI 
2022 (4) TMI 877
X X X X Extracts X X X X
X X X X Extracts X X X X
....ised Representative for the Department. 2. The facts of the case in brief are that M/s Blue Whale (India) Pvt Ltd. [Blue Whale] purchased pan masala in bulk from M/s Unicorn Industries [Unicorn] repacked it into smaller pouches and exported it. It is undisputed that the process of packing and repacking pan masala amounts to manufacture. As manufacturer, Blue Whale took CENVAT credit of the excise duty paid by the Unicorn. A show cause notice dated 29.09.2015 [SCN] was issued by the Directorate General of Central Excise Intelligence [DGCEI], Ahmedabad to Blue Whale proposing to deny CENVAT credit of Rs. 2,81,51,136/- taken by it on the strength of input invoices issued by Unicorn and recover it under and Rule 14 of CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act. It was further proposed to reject the assessable value declared by Blue Whale in its ER-1 returns and redetermine the value at Rs. 324 per kg under section 4(1)(b) of Central Excise Act read with Rule 14 of the Central Excise Valuation (Determination of price of excisable goods) Rules, 2000. It was also proposed to demand interest at the appropriate rate and impose penalties. The show cause notice....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es not allege that CENVAT credit was taken without receiving goods or on the basis of forged documents or that no central excise was paid by the supplier or that the goods were not used in the manufacture of excisable goods. The allegation of wrong availment of credit is solely based on the charge of overvaluation of goods at the supplier‟s end. Relying on the Board Circular No. 1014/2/2016-CX dated 1.02.2016, he held that once the supplier has paid central excise duty, CENVAT credit of the same cannot be questioned at the receiver‟s end. The relevant extract of the Circular is as follows: "4.6 It is observed that as per the provisions of Rule 3 and 4 of the CENVAT Credit Rules, 2004, a recipient manufacturer is entitled to avail the cenvat credit of duty of excise indicated in the duty paying document. Looking into the scheme of Cenvat, it is settled position that if the raw material suffers duty then relief should be given so far as excise duty on the final product is concerned. It is also observed that the Board, in Circular No. 1014/2/2016-CX dated 01.02.2016 has clarified this very issue. Relevant part is quoted as under: 5. Show Cause Notice denying Cenva....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eld as follow: " In this case, it was held by the Tribunal that as long as an amount of duty indicated in valid duty paying documents was paid and inputs/ capital goods indicated in said documents were eligible for credit, received and used by a manufacturer in his factory, credit cannot be denied. Cenvat credit can also not be denied to recipient of inputs on the ground that manufacturer-supplier has paid duty by declaring higher value, more so when correct value not re-determined at suppliers end and supplier not applied or avail refund of higher duty paid." 9. The observations of the adjudicating authority are incorrect as the correct value of the goods at the supplier‟s end was duly determined in this case during investigation and stated in the show cause notice. The further inadmissibility of credit of the duty paid to the extent of over-valued portion by the supplier was mentioned time and again in the show cause notice, which was not appreciated by the adjudicating authority. 10. The adjudicating authority relied on MDS Switchgear Limited and dropped the demand in the SCN. 11. Learned counsel for the Blue Whale submitted that Unicorn has supplied similar goods to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rcise the powers and discharge the duties conferred or imposed under this Act on any other Central Excise Officer who is subordinate to him. (2) Notwithstanding anything contained in sub-section (1), the Commissioner of Central Excise (Appeals) shall not exercise the powers and discharge the duties conferred or imposed on a Central Excise Officer other than those specified in section 14 or Chapter VIA. 14. The next question is who has been conferred the power to determine or re-determine the Central Excise duty. Rule 6 of the Central Excise Rules, 2002 requires the assessee himself to assess the duty payable on any excisable goods. Rule 12 requires the assessee to submit monthly returns to the Superintendent of Central Excise. Sub-Rule (3) of this Rule states that the proper officer may, on the basis of the information contained in the return filed by the assessee and further enquiry, as he may consider necessary, scrutinize the correctness of the duty assessed by the assessee on the goods removed, in the manner to be prescribed by the Board. Sub-rule (4) requires the assessee to make available to the proper officer all the documents and records for verification as and when requ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iled by Unicorn lies with its jurisdictional Superintendent. The goods cleared by Blue Whale were exported and the assessment/ re-assessment of the Shipping Bills for export lie with the proper officer of Customs. DGCEI officers have no jurisdiction to re-assess the Shipping Bills also. 16. We further find that if on scrutiny, the assessment by the assessee is found to be incorrect and the assessee does not agree with the officer‟s assessment, there are two options. One is for the department to file an appeal with the Commissioner (Appeals). It has been held by the Constitution Bench of Supreme Court disposing of a batch of matters involving Customs, Excise and Service Tax in ITC Ltd vs. Commissioner of Central Excise, Kolkata IV [2019 (368) E.L.T. 216 (S.C.)] that all assessments including self-assessments can be appealed before the Commissioner (Appeals). 17. The other option is by issuing a Show Cause Notice under Section 11A. This option is restricted by WHO, WHEN and WHY can an SCN be issued. As far as WHO is concerned, it has to be the Central Excise officer. As far as WHEN is concerned, it is within the normal period of limitation or extended period of limitation of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... officer even higher in rank than proper officer, who framed assessment at the time of export, cannot modify a shipping bill qua value and consequent entitlement of duty drawback while issuing notice or passing order under Rule 16 of the Drawback Rules, 1995. The contention of the counsel for Respondents that as per Valuation Rules, 2007 proper officer has power to re-assess value of goods even though already exported is untenable. As noted in Famina Knit Fab (supra) and hereinabove, Valuation Rules are applicable to 'export goods' and these Rules are not enabling provisions to frame re-assessment. Section 14 empowers to frame Rule to reject declared value and re-determine value of export goods. The Valuation Rules, 2007 are framed in exercise of power conferred by Section 14 of 1962 Act. Rule 1(3) and 8 of Valuation Rules permit to reject value of 'export goods'. As per definition of export goods, the goods which stand exported are not "export goods‟ so Valuation Rules, 2007 are not applicable to goods already exported. Valuation Rules, 2007 would come into play as soon as the proper officer gets power to reassess already assessed shipping bill. Prior to 8-4-2011, it was pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....its. 21. As rightly held by the Commissioner in the impugned order only two issues have to be decided. The first issue is if duty is paid on a particular value at the supplier‟s end, can that value be challenged or modified at the end of the recipient of the goods. 22. Classification and valuation are part of the assessment of duty. Valuation of the goods cleared by the supplier cannot be modified by the officers at the end of the recipient so as to reduce the CENVAT credit. It has been held not only in a catena of judgements but it has also been clarified by the Board in Circular dated 01.02.2016 that when Central Excise Duty has been paid, CENVAT credit on the same cannot be questioned at the receiver‟s end. Learned Commissioner was, therefore, correct in rejecting the proposal to deny CENVAT credit because undisputedly the duty was paid and the goods were received and they were used in the manufacture of the final products by Blue Whale. 23. The contention of the Revenue in this appeal is that the goods were sold at a very high price and they should have been sold at the cost of manufacture plus 50% towards other expenses and profits. We fail to see how the DGCEI ....