TaxTMI 
TaxTMI 
2023 (11) TMI 963
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....l Excise duty amount to Rs.28,12,668.00 (Rupees twenty eight lakhs twelve thousand six hundred and sixty eight only) already paid by the said party. 2. I confirm the demand of interest on the above mentioned amount under the provisions of Section 11 AB of the Central Excise Act, 1944. 3. I impose a penalty of Rs. 1,43,34,224.00 (Rupees one crore forty three lakhs thirty four thousand two hundred and twenty four only) on the said party under the provisions of Section 11 AC of the said Act, read with Rule 25 of the Central Excise Rules, 2002." 1.2 The impugned order has been challenged by the appellant in this appeal. Appeal was earlier dismissed by the Tribunal vide Final Order No.71005/2018 dated 20.02.2018, holding as follows : "6 Having considered the rival contentions and on perusal of facts on record, we find that there is no allegation in the Show Cause Notice that the appellant have valued their goods, transferred to other units, at value lesser than the value as per CAS-4 standards. Accordingly, we hold that the Show Cause Notice is vague and is not maintainable. Accordingly we set aside the impugned order and allow the appeal. the appellant sha....
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.... view taken by the Tribunal in the remanded proceedings. Accordingly, we set aside the impugned order and relegate the parties before the Tribunal for consideration of the appeal afresh. All questions are kept open. The appeal is allowed in the above terms. No costs." 1.4 This matter has been taken up for consideration as per the directions contained in the order of the Hon'ble Supreme Court. 2.1 Appellant is engaged in manufacture of Ethyl alcohol Denatured Spirit (SDS) classifiable under 22072000 of the First Schedule to Central Excise Tariff Act, 1985. 2.2 Appellant was clearing the SDS produced by it to its sister concern at Barabanki on stock transfer basis after payment of duty at the transfer price determined by them. During course of audit a memorandum BBK/DW-112/4464 dated ½-03-04 issued by Shri S C Chajjar of appellant unit at Barabanki was recovered as per which the Cost Accountant R K Agarawal has certified the cost of SDS transferred to Barabanki unit during the period 2003-04 was Rs 15.34 per unit whereas the appellant has during the said period discharged the duty on the value of Rs 14.04 per unit. 2.3 The show cause notice dated 07.11.2007 w....
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....y which has been demanded under this show cause notice confirmed by the impugned order is admissible as credit to their sister concern at Barabanki. Hence entire demand is Revenue neutral and extended period of limitation could not have been invoked as have been held in the following submissions:- Nirma Ltd. [2006 (200) E.L.T. 213 (Tri.-Mum.)]. Affirmed as reported at [2015 (325) E.L.T. 232 (S.C.)]. Hindalco Industries Ltd. [2009 (248) E.L.T. 391 (Tri.-Del.)]. Affirmed as reported at [2010 (254) E.L.T. A42 (S.C.)]. Coca-Cola India Pvt. Ltd. 2007 (213) E.L.T. 490 (S.C.). Mafatlal Industries Ltd. [2009 (241) E.L.T. 153 (Tri.-Ahmd.)].Affirmed as reported at [2010 (255) E.L.T. A77 (S.C.)]. Anglo French Textiles [2018 (360) E.L.T. 1016 (Tri.-Chennai)]. Affirmed as reported at [2018 (360) E.L.T. A301 (S.C.)]. ➢ Allegations in show cause notice have been made on the basis of value as per the CAS-4. Appellant used to determine the transfer price for their own purpose as has been indicated in the said memo it was not the value as determined as per CAS-4. Hence sole reliance on the said memo for making this demand is totally uncall....
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....l in the case of Jai Yushin [2000 (119) E.L.T. 718 (Tribunal - LB)]. ➢ Demand would not be hit by limitation. ➢ Appellant is working under a self-assessment regime and the law on the subject is very clear; they were at the end of the each financial year required to submit the documents for finalization of the transfer price to the sister concern which they have not done with the for intent to evade payment of duty hence the penalty imposed on them is justifiable. ➢ Appeal should be dismissed. 4.1 We have considered the impugned order along with the submissions made in the appeal and during the course of arguments. We have also taken note of the direction contained in the Hon'ble Supreme Court decision. 4.2 We observe that that demand in the show cause notice is has been made on the basis of the Memo dated 01/02-03-2004 which reads as follows: "Reg: Transfer Price of Alcohol Based on the finalized (Audited) Captainganj Accounts for the Financial Year 2002-03 cost of production of Alcohol produced by Captainganj has been worked out as Rs 13.26 per Ltr. As per the Central Excise Rules we have to add 15% on the cos....
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....the correct position. While working out the cost of production Cost Accountant as is evident from the working sheets attached that cost accountant has included the value of interest and finance charges. These were not to be included as per CAS-4. They have furnished revised costing sheets excluding these charges. The Costing Sheets and revised costing sheets for the respective years are reproduced below: Statement of Cost of production relied in SCN 2002-03 2004-05 2005-06 2002-03 2004-05 2005-06 Production 26350754. 8 6279484. 40 7387327. 8 S No Particulars Total Cost (Rs) Cost/Unit (Rs) 1 Raw Materials 7620697 9.82 9412563.9 9 12.74 2 Power & Fuel 3786442. 26 6914872.1 8 0.94 3 Acetaldehyde 755054.59 1165449.0 0 0.16 4 Stores & Chemical 2474523.5 6 163....
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....nbsp; 6367474.0 0 27 Opening Stock 457950.00 28 Total 13060899 4.59 14734344 5.75 20.80 19.95 29 Profit @10/ 15% 2.08 22.94 30 Denaturing Fees .15 0.10 31 Total 23.03 23.04 Revised Statement of Cost of Production 2002-03 2004-05 2005-06 2002- 03 2004-05 2005-06 Q1 Quantity Produced (BL) 26350754.8 6279484.40 7387327.80 Q2 Quantity Dispatched (BL) Particulars Total cost (Rs) Cost/unit (Rs) 1 Materials Consumed 167851757.47 76962034.41 95291083.99 6.37 12.26 12.90 2 Direct wages and Salary 46941908.37 14035122.61 22393126.73 ....
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....d. Hence we are not in position to give much weightage to the charts submitted subsequently. We had asked for the documents on which these charts had been prepared but the same could not be produced as the unit had closed down. 4.5 The value in this case was to be determined as per CAS 4. and the assessable value as per Rule 8 of the Central Excise Valuation Rules, 2000 the cost of production X 110% (10% being the notional profit to be added). Further as per the procedure prescribed for determining the assessable value of goods as per Rule 8, the value of the goods at the time of clearance has to be determined on the basis of the previous year finalized accounting records and subsequently after the closure of the financial year redetermined on the basis finalized records of the year during which the clearances are made. This has been admitted by the appellant General Manager Shri S L Garg in his statement recorded under Section 14 of the Central Excise Act, 1944. reference is also made to Guidance Note On Cost Of Production For Captive Consumption (Under Rule 8 Of The Central Excise Valuation (Determination Of Price Of Excisable Goods) Rules, 2000) Issued By The Institute Of Cos....
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.... are inclined to give the benefit by reducing the interest and finance charges from the cost of production so determined. Thus for the Financial Year the cost of production and the assessable value as per Rule 8 is determined below: Quantity Produced 6279484.40 Total Cost of Production as per the Cost Sheet 130608994.59 Interest and Finance Charges as per the Cost Sheet 9443348.00 Redetermined Cost of production 121165646.59 Cost Per unit 19.30 Total Cost as per Rule 8 (110%) 21.23 We also note that during the financial year 2005-06 appellant has at the time of clearance of the goods itself discharged the duty by determining the value at Rs 23.03 per unit revenue has redetermined the value at Rs 23.09 per unit in the show cause notice. The difference in the value on which duty has been demanded being meager has been admitted by the appellant and they have discharged the total differential duty demanded for this period. 4.7 We also note that the Commissioner as by the impugned order while confirming the demand has ordered for appropriation of Central Excise duty amounting to Rs.28,12,668/-. In their reply to show cause notice appellants have....
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.... 31.03.2008 May 1170739.00 Unpaid June 2549013.00 July 590862.00 7199.00 August 1064529.00 21280.00 September 362575.00 7249.00 October 0 0 November 0 0 december 0 0 January 0 0 February 0 0 March 34139.00 682.89 Total 8569912.00 36410.89 2005-06 April 0 0 191 03.04.2008 May 0 0 June 0 0 July 5716.00 109.00 August 4333.00 82.00 September 2402.00 47.00 October 0 0 November 0 0 December 8047.00 159.00 January 15117.00 292.00 February 16623.00 323.00 March 18564.00 363.00 Total 70802.00 1375.00 Tribunal while staying this order has noted that Appellant have already paid an amount of Rs.85,25,918/- towards central excise duty and Rs.37,843/- towards education cess. From this chart it is quite evident that appellant has admi....
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....e on the basis of the value, the assessee is to apply the rate of duty to the value and pay the duty on or before the sixth day of the month succeeding the month in which removal of the goods takes place. Undoubtedly, if the removal takes place in March, the payment is to be made by 31st of March. 50. We have also noticed what happens if there is provisional assessment. In the case of provisional assessment, the assessee entertains a doubt regarding the actual value or the rate of duty. He applies and he is permitted under the order to remove goods on a provisional assessment. The assessment is thereafter finalized. When the provisional assessment is finalized, the assessee becomes liable however to pay interest from the first date of the month succeeding the month for which the amount is determined. We have no doubt in our mind that under Rule 7(4), the expression "succeeding the month for which such amount" is determined refer to the month of removal of the goods. When the provisional assessment has such consequences, it would occasion an invidious discrimination to place an interpretation on Section 11AB by which those assesses who go in for provisional assessment under....
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....sessee should have resorted to Rule 7. 53. As we have already noted, SAIL has paid the differential duty of Rs. 142.78 crores even without waiting for any notice under Section 11A(1). The assessee volunteered and made payment in October 2006. We find merit in the finding by the authority that this is a case where therefore the payment made by the assessee is to be treated as one falling under Section 11A(2)(b). This meant also that there was no need for determination of the duty within the meaning of Section 11A(2)(a) or issuance of notice under Section 11A. 59. We are here concerned in these cases with one of the ingredients of assessment, namely, valuation. There is no dispute regarding the quantity removed. There is no issue relating to rate of duty. The dispute is relating to the correct value. To appreciate it better, let us take an example of an assessee who deliberately undervalues the goods which he removed. This results in assessee arriving at an amount which would not be the correct amount. He pays this incorrectly assessed amount. Would it be a case of short-levy or short payment? If short-levy is to be understood as confined to cases where the assessme....
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....antive provision providing for payment of interest in a fiscal statute, interest cannot be demanded, we would think in the context of the Act and the Rules in question, under Section 11AB, particularly, when there is no dispute relating to liability to pay the differential duty and we notice that absence of dispute is a fair acknowledgement of the fact that the facts of the present cases are unlike the situation in MRF decision where the price was fixed at the time of removal, interest is payable as provided in Section 11AB and from the point of time indicated therein. But in these cases, the price was variable under the escalation clause which was very much within the knowledge of the assessee and the demand for interest is sustainable. 62. As far as the scope of the second explanation of Section 11A(2)(b) is concerned, it contemplates payment voluntarily by the assessee. It is without any notice being issued under Section 11A. There is also reference to liability on the part of the assessee to pay interest under Section 11A(2)(b), not only on the amount which is paid within the meaning of Section 11A(2)(b) but on any short payment as may be determined by the excise offic....
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....ntial duty is paid. We would think that while the principle that the value of the goods at the time of removal is to reign supreme, in a case where the price is provisional and subject to variation and when it is varied retrospectively it will be the price even at the time of removal. The fact that it is known, later cannot detract from the fact, that the later discovered price would not be value at the time of removal. Most significantly, Section 11A and Section 11AB as it stood at the relevant time did not provide read with the rules any other point of time when the amount of duty could be said to be payable and so equally the interest. We would concur with the views expressed in SKF case (supra) and International Auto (supra). We find no merit in the appeals. The appeals will stand dismissed." The demand of interest in terms of section 11AB is upheld. 4.10 No substantial reason has been stated in the show cause notice or the adjudication order, for invoking the extended period and for imposition of penalty under Section 11AC. Show cause notice alleges as follows: "From the foregoing facts, it appear s that M/s J R Organics Ltd. Unit Captainganj distill....