Custom, Excise & Service Tax Tribunal
Shyam Ferrow Alloys Ltd. Durgapur Unit. vs Coms,C.Ex - Bolpur on 24 October, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
EASTERN ZONAL BENCH: KOLKATA
Ex.Appeal Nos.66,67/09
(Arising out of Orders-in-Original Nos.18-19/Commissioner/Bol/08
dated 05.11.2008 passed by Commr. of Central Excise, Bolpur)
M/s Shyam Ferro Alloys Ltd.
Shri Anjani Kumar Goyel
Applicant (s)/Appellant (s)
Vs.
CCEx., Bolpur
Respondent (s)
Appearance:
Shri N. K. Chowdhury, Advocate for the Appellant (s) Shri S. S. Chattopadhyay, Supdt. (AR) for the Revenue CORAM:
HON'BLE SHRI P.K.CHOUDHARY, MEMBER (JUDICIAL) HON'BLE SHRI V. PADMANABHAN, MEMBER (TECHNICAL) Date of Hearing : 24.10.2018 Date of Decision : 24.10.2018 ORDER NO...FO/A/76847-76848/2018 Per Bench :
The present appeals have been filed against the Orders-in- Original Nos.18-19/Commissioner/Bol/08 dated 05.11.2008.
2. The appellants, M/s Shyam Ferro Alloys Ltd. have two units for the manufacture of various types of Ferro Alloys. The present dispute is with reference to Durgapur Unit. Certain goods manufactured at Durgapur Unit, were cleared to Burdwan Unit in semi-finished stage for finishing. For transfer of the goods from Durgapur Unit to Burdwan Unit, the duty was paid by adopting certain values. The Department 2 Ex.Appeal Nos.66,67/09 after analyzing the value adopted by the appellants, came to the conclusion that the value adopted was less and hence proceeded to redetermine the value of the goods for such transfer. The differential duty was accordingly demanded in the show-cause notices. The second issue involved in the present dispute is that during the course of verification of the stock of various finished goods at the Durgapur Factory on 06.10.2004, certain shortages were found in respect of Silico Manganese, Ferro Manganese, Ferro Chrome and other items. Accordingly, duty amounting to Rs.5,37,275/- was paid by the appellants due to that shortages of finished goods. In the impugned order, duty paid on the shortages were appropriated and differential duty for the alleged under-valuation was demanded. The order further imposed penalties on the appellant as well as on the Director of the Appellant Company, under Section 11AC of the Central Excise Act, 1944 read with relevant Rules. This impugned order is under Challenge in the present appeals.
3. The appellants' case is argued by Shri N.K.Chowdhury, ld.Advocate. He submitted that the appellants did not press the dispute with respect of the shortages, which stand admitted and duty thereon already paid. But he submitted that the under-valuation alleged by the Department and confirmed by the Adjudicating Authority, is being challenged by the appellants. During the course of investigation, the appellants produced the CAS-4 Certificate duly certified by the Chartered Accountant for arriving at the value of stock transfer goods. Even though as per such CAS-4 Certificate, the assessable value determined in terms of Rule 8 of the Central Excise 3 Ex.Appeal Nos.66,67/09 Valuation Rules, 2000, came to be more than the value adopted for payment of duty, the Department did not accept such CAS-4 Certificate. Subsequently, the Department has arrived at a value for such stock transfer ignorning the CAS-4 Certificate. He submitted that the situation is one of the revenue neutrality in which the goods manufactured in the Durgapur Unit are stock transferred to their Burdwan Unit. Any differential duty paid at the Durgapur Unit will be available as cenvat credit to the Burdwan Unit which also belongs to the same appellant. He relied on the following case laws and submitted that in view of the revenue neutral situation, the demand for the differential duty may not be sustained :
(i) Anglo French Textiles : 2018 (360) ELT 1016 (Tri.-
Chennai) ;
(ii) Jay Yuhshin Ltd. : 2000 (119) ELT 718 (Tri.-LB).
4. The case of the Department is argued by Shri S.C.Chattopadhyay, ld.D.R. He submitted that the valuation adopted for stock transfer by the appellant is very much lower than the value as per CAS-4 Certificate submitted by the appellants themselves. Due to certain errors in such CAS-4 Certificate, Department properly arrived at the value by correcting such mistakes in the CAS-4 Certificate. As such, he submitted that the differential duty as arrived at by the Department, may be upheld.
5. Heard both sides and perused the records.
6. The first issue regarding shortage of goods found during stock verification is not pressed by the appellants. Accordingly, we uphold 4 Ex.Appeal Nos.66,67/09 the findings of the lower authorities in terms of confirming duty on the goods found short along with interest and penalty equal to such duty.
7. The main dispute is regarding the valuation of the goods to be adopted for stock transfer from the Durgapur Unit to Burdwan Unit. Since such transfer does not involve sale, the valuation is required to be adopted in terms of Rule 8 of the Central Excise Valuation Rules, 2000. This Rule prescribes that the valuation is to be determined at the rate of 115%/110% (as prevalent at the relevant time) of the value of the goods arrived at as per CAS-4 Standard. Such Standard have been prescribed by the Institute of Cost & Works Accountants of India (ICWAI). The valuation adopted for such stock transfer by the appellants is admittedly is not meeting such Standards. At the direction of the Department, the CAS-4 Certificate was obtained and submitted by the appellants, but not accepted by the Department. Department was of the view that there were some errors in preparation of such CAS-4 Certificates. The claim of the appellant in this regard is that the Department has proceeded to value such goods as though they were finished goods ignoring the fact that the goods transferred to Burdwan Unit, were semi-finished goods requiring further processing to be carried out in Burdwan Unit to make the goods finished. It is further seen that the Department has arrived at the valuation by making their own corrections in the CAS-4 Certificate submitted by the appellants.
8. In view of the above, we find that neither the value adopted by the appellants for payment of duty nor the value finally adopted by the Revenue, is as per CAS-4 Certificate. The valuation adopted by the 5 Ex.Appeal Nos.66,67/09 Department has not been certified by the Cost Accountants. In spite of the above situation, we are of the view that the dispute can be decided on the ground of revenue neutrality.
9. It is not in dispute that any differential duty paid by Durgapur Unit will be available as cenvat credit in the Burdwan Unit. This leads to revenue neutral situation. The Chennai Bench of the Tribunal in the case of Anglo French Textiles (supra), which has been affirmed by the Hon'ble Supreme Court in the case of Commissioner Vs. Anglo French Textiles : 2018 (360) ELT A301 (SC), has taken a view that in such revenue neutral situation, there can be no allegation of suppression and no demand of differential duty is sustained. In this regard, the Bench relied upon the Larger Bench's decision in the case of Jay Yuhshin Ltd. (supra).
9. By following the above decision, we are of the view that the demand for differential duty, arrived at by questionable means, does not merit to be sustained. Accordingly, the demand of differential duty along with associated penalties are set aside. The penalty on the Director of the Appellant Company is also set aside. But we hasten to add that we have not interfered with the findings of the lowered authority regarding shortages.
10. In the result, the appeals are partly allowed.
(Dictated and pronounced in the open court.)
Sd/ Sd/
(P.K.Choudhary) (V.Padmanabhan)
Member (Judicial) Member (Technical)
mm