Custom, Excise & Service Tax Tribunal
Jaipur I.. vs Blue Whale Enterprises India Pvt Ltd on 18 April, 2022
Author: Dilip Gupta
Bench: Dilip Gupta
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH-COURT NO. 1
EXCISE APPEAL NO. 51558 OF 2017
[Arising out of Order-in-Original No. JOD-EXCUS-000-COM-0008-17-18 dated
31.05.2017 passed by the Commissioner Central Excise, Jodhpur]
The Commissioner, Central Goods
& Service Tax, & Central Excise, Jaipur Appellant
Versus
Blue Whale (India)
Pvt Ltd. Respondent
SP-818 (G), Road No. 14, VKI
Area, Jaipur (Raj.)
Appearance
Shri Sanjay Kumar Singh, Authorised Representative for the
Appellant/Department
Shri Paresh M. Dave, Advocate for the Respondent.
With
EXCISE APPEAL NO. 51052 OF 2018
[Arising out of Order-in-Original No. JOD-EXCUS-000-COM-0008-17-18 dated
31.05.2017 passed by the Commissioner Central Excise, Jodhpur]
The Commissioner, Central Goods
& Service Tax, & Central Excise, Jaipur Appellant
Versus
M/s Unicorn Industries Respondent
Khasra No. 786/1064
Majhigaon, Jorethang, Sikkim
Having Office at 57,
Mahavir Nagar Society, Behind L J
Commerce College, Vastrapur, Ahmedabad
With
EXCISE APPEAL NO. 51053 OF 2018
[Arising out of Order-in-Original No. JOD-EXCUS-000-COM-0008-17-18 dated
31.05.2017 passed by the Commissioner Central Excise, Jodhpur]
2
E/ 51558/2017,
E/51052, 51053, 51054, 51059, 51096/2018
The Commissioner, Central Goods
& Service Tax, & Central Excise, Jaipur Appellant
Versus
Shri Jignesh Rajendra Shah, Director Respondent
M/s Blue Whale (India) Pvt Ltd.
Office at B-179, GIDC, Sector 25,
Gandhinagar-382 025, Gujarat
With
EXCISE APPEAL NO. 51054 OF 2018
[Arising out of Order-in-Original No. JOD-EXCUS-000-COM-0008-17-18 dated
31.05.2017 passed by the Commissioner Central Excise, Jodhpur]
The Commissioner, Central Goods
& Service Tax, & Central Excise, Jaipur Appellant
Versus
M/s Vedprakash Wadhwani Respondent
Partner of M/s Unicorn Industries,
Residing at 3, Rajnigandha Bunglows
Near Sant Kabir School,
Drive-in-Road, Ahmedabad
With
EXCISE APPEAL NO. 51059 OF 2018
[Arising out of Order-in-Original No. JOD-EXCUS-000-COM-0008-17-18 dated
31.05.2017 passed by the Commissioner Central Excise, Jodhpur]
The Commissioner, Central Goods
& Service Tax, & Central Excise, Jaipur Appellant
Versus
Shri Dhanjibhai Mangukiya Respondent
Director of M/s Emmkae Trading
Cooperation Pvt Ltd.
Office at A-601, Golden Plaza
Ankur Char Rasta, A K Road, Surat
With
EXCISE APPEAL NO. 51096 OF 2018
3
E/ 51558/2017,
E/51052, 51053, 51054, 51059, 51096/2018
[Arising out of Order-in-Original No. JOD-EXCUS-000-COM-0008-17-18 dated
31.05.2017 passed by the Commissioner Central Excise, Jodhpur]
The Commissioner, Central Goods
& Service Tax, & Central Excise, Jaipur Appellant
Versus
Shri Venkat Raghunath Chari Respondent
B-17 Anant Apartments,
Malabar Hill Road
Mulund Colony, Mumbai-400 082
Appearance
Shri Sanjay Kumar Singh, Authorised Representative for the
Appellant/Department
Ms. Surabhi Sinha, Advocate for the Respondent.
CORAM: HON‟BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON‟BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL)
Date of Hearing: March 29, 2022
Date of Decision: April 18, 2022
Final Order Nos. 50338-50343 /2022
P.V. SUBBA RAO:
1. We have heard Shri Paresh M. Dave, learned counsel for the
M/s Blue Whale Enterprises India Private Limited in Appeal No.
51558 of 2017, and Ms. Surabhi Sinha, learned counsel for M/s
Unicorn Industries in Appeal No. 51502 of 2018 for Shri Jignesh
Rajendra Shah in Appeal No. 51053 of 2018 for Shri Vedprakash
Wadhwani in Appeal No. 51054 of 2018 for Shri Dhanjibhai
Mangukiya in Appeal No. 51059 of 2018 and for Shri Venkat
Raghunath Chari in Appeal No. 51096 of 2018. We have also heard
Shri Sanjay Kumar Singh, learned authorised Representative for the
Department.
4
E/ 51558/2017,
E/51052, 51053, 51054, 51059, 51096/2018
2. The facts of the case in brief are that M/s Blue Whale (India)
Pvt Ltd.1 purchased pan masala in bulk from M/s Unicorn
Industries2 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 29.09.20153 was issued by the Directorate
General of Central Excise Intelligence4, 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 re-
determine 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 also proposed to impose penalty
under Rule 25 (1) of Central Excise Rules, 2002 upon Unicorn and
under rule 26(2)(ii) on Shri Jignesh Rajendra Shah, Shri Venkat
Raghunath Chari and Shri Vedprakash Wadhwani and Shri
Dhanjibhai Mangukiya. The Commissioner has, by the impugned
1 Blue Whale
2 Unicorn
3 SCN
4 DGCEI
5
E/ 51558/2017,
E/51052, 51053, 51054, 51059, 51096/2018
order, dropped all proceedings in pursuance of this show cause
notice. Hence, this appeal by the Revenue.
3. The case of the Revenue is that Unicorn is located in Sikkim
and was entitled to the benefit of the area based exemption
notification no. 71/2003-CE dated 09.09.2003 according to which it
has to pay central excise duty on the goods manufactured and
cleared by it but will get a complete refund of the duty paid in cash.
Since duty is paid (although liable to be refunded as per the
notification), the buyer (in this case Blue Whale) is also entitled to
take CENVAT credit of the duty so paid. This legal position is
undisputed. The case of the Revenue is that Unicorn has grossly
over-valued its final products sold to Blue Whale so as to pass on
the excess CEVNAT credit to the latter. Unicorn would not lose
even a penny by paying excess duty because the duty paid by it in
cash will be refunded to it as per the exemption notification.
Investigations in this case were initiated and completed by the
DGCEI who, after investigation, concluded that the average cost of
production of pan masala by Unicorn was Rs. 160 per kg. After
adding 50% as other expenses and profit, the assessable value of
pan masala was re-determined at Rs. 240 per kg. However, Unicorn
issued invoices and sold pan masala at the rate of Rs. 1,700 per kg
to Blue Whale and paid excess central excise duty (which was to be
refunded) and also pass on excess CENVAT credit to Blue Whale.
6
E/ 51558/2017,
E/51052, 51053, 51054, 51059, 51096/2018
4. The SCN proposes to re-assess the duty paid by Unicorn
thereby lowering the duty liability of Unicorn and thereby the
CENVAT credit admissible to Blue Whale. The Commissioner has
identified and decided the falling two issues in the case:
(i) Whether the excess CENVAT credit of Rs 2,81,51,136/-
said to be availed by Blue Whale due to higher
valuation of pan masala at the end of supplier was
admissible to them or not;
(ii) Whether the value of the good cleared for export by
Blue Whale needs to be re-determined at Rs. 324 per
kg instead of Rs. 1784 per kg as declared by them.
5. On the first issue, he observed that the show cause notice
does 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:
7
E/ 51558/2017,
E/51052, 51053, 51054, 51059, 51096/2018
5. Show Cause Notice denying Cenvat Credit of CVD paid
voluntarily by the importers at the time of import is not
warranted. It is well settled position in law that a buyer may
avail Cenvat Credit, if supplier has paid duty. In this regard
following case laws may be referred-CCE vs. CEGAT 2006 (202)
ELT 753 (Mad. HC D.B.), CCE vs. Ranbaxy Labs, Ltd. [2006 (203)
ELT 213 ( P & HHC DB)]. Credit is accordingly admissible for duty
paid voluntarily.
6. Thus, once the importer has paid CVD on import of ship,
Cenvat Credit of that CVD cannot be denied for payment of
Central Excise duty on breaking of that ship. SCNs already
issued for denying Cenvat Credit may be decided in the
light of these instructions and in future such SCN may not
be issued."
6. He also relied on the case laws of Commissioner of Central
Excise vs. MDS Switchgear Limited5 and M/s Ran India Steels
Pvt Ltd. Unit II vs. Commissioner of Customs & Central
Excise, Salem6 and held that Blue Whale correctly availed
CENVAT credit because the inputs were received by it and the duty
was paid on the input and credit was taken as per the duty paid.
7. On the second issue of proposed re-determination of the
value of the goods exported by the appellant to Rs. 324 per kg from
Rs. 1,784 per kg, he held that the statutory provisions do not allow
re-determination of the value of exported good declared by the
assessee when there is no record of case of over valuation booked
by the customs authorities who cleared the goods. He relied upon
Sterlite Industries India Ltd. vs. Commissioner of Customs 7.
8. Revenue is aggrieved by the impugned order and filed this
appeal on the following grounds:
5 2008 (229) ELT 485 (SC)
6 2016 (344) ELT 440 (Tri.-Chennai)
7 2009 (236) ELT 143 (Tri-Chennai)
8
E/ 51558/2017,
E/51052, 51053, 51054, 51059, 51096/2018
(i) The show cause notice issued by DGCEI in this case clearly
mentioned that Unicorn had overvalued the goods and paid Central
Excise Duty intentionally at higher value as they are entitled to the
refund of the duty paid to pass on excess credit to Blue Whale. The
said over-valuation was done with the malafide intention and in
collusion with Blue Whale who are exporting the goods
manufactured out of goods supplied by Unicorn. The relationship
between the Unicorn and Blue Whale resulted in their collusion in
defrauding the Government Revenue.
(ii) While dropping the demand, Commissioner has relied upon
the case laws Ran India Steels India Pvt Ltd. in which it was
held 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.
9
E/ 51558/2017,
E/51052, 51053, 51054, 51059, 51096/2018
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 four companies. While in this case
Blue Whale has been issued a show cause notice to deny CENVAT
credit, some other buyers, viz., M/s Kamakshi Trade Exim India Pvt
Ltd. and M/s Grade Nutrients India Pvt. Ltd., were denied rebate on
exports by the original authority but were allowed rebate by the
Commissioner of Central Excise (Appeal) Ahmedabad against which
Revenue filed revision applications before the Government of India.
The Revision applications were disposed of by the order No. 1351-
1352 of 2012/CE dated 01.10.2012 by the Joint Secretary of
Government of India under section 35E of the Central Excise Act,
1944. He remanded the matter back for fresh decision taking into
account outcome of DGCEI investigations as well as the final
decisions in classification matter by common adjudicator
Commissioner of Central Excise, Vapi. He further submits after that,
the common adjudicator has not decided the matter regarding
valuation in Unicorn and, therefore, the rebate was not sanctioned.
Aggrieved, they filed the Special Civil Applications No. 14616 with
14617 of 20158 before the High Court of Gujarat which were
disposed of by the High Court setting aside the orders of passed by
the Joint Secretary and ordering the rebate to be sanctioned.
Thereafter, the rebate was sanctioned but no interest was paid to
8 2016(338) ELT 528 (Guj)
10
E/ 51558/2017,
E/51052, 51053, 51054, 51059, 51096/2018
M/s Kamakshi. Hence Special Civil Application No. 19916 of 2016
was filed by them before the High Court of Gujarat which was
decided by the High Court9 ordering sanction of interest also.
12. We have considered the submissions on both sides and
perused the records.
13. At the outset, we find that show cause notice issued by the
DGCEI seeks to deny credit under Rule 14 read with Section 11A of
central Excise Act and also seeks to re-determine the assessable
value of the goods exported by Blue Whale. Rule 14 of the Central
Excise Rules provides for issue of notice to recover irregularly
availed CENVAT credit, and the provisions of Section 11A apply
mutatis mutandis to such recovery.
14. The first question to be addressed is whether the officers of
DGCEI have the power to re-determine the assessable value. The
powers of Central Excise officers have been defined in Section 12E
of the Central Excise Act which reads as follows:
Section 12E. Powers of Central Excise Officers.
(1) A Central Excise Officer may exercise 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
9 2017 (351) ELT 102 (Guj)
11
E/ 51558/2017,
E/51052, 51053, 51054, 51059, 51096/2018
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 required by such officer. These Rules are reproduced
below.
Rule 6. Assessment of duty.- The assessee shall himself assess the
duty payable on any excisable goods.
Provided that in case of cigarettes, the Superintendent or Inspector of
Central Excise shall assess the duty payable before removal by the
assessee.
Rule 12. Filing of return.-
(1) Every assessee shall submit to the Superintendent of Central
Excise a monthly return in the form specified by notification by the
Board, of production and removal of goods and other relevant particulars,
within ten days after the close of the month to which the return relates:
******
(3) The proper officer may on the basis of information contained in the return filed by the assessee under sub-rule (1), and after such 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. (4) Every assessee shall make available to the proper officer all the documents and records for verification as and when required by such officer.
******
15. Thus, the assessment of duty which includes determining the classification of the goods, their valuation, the exemption notifications that may apply and determining the duty payable 12 E/ 51558/2017, E/51052, 51053, 51054, 51059, 51096/2018 is the responsibility of the assessee itself as per Rule 3. The assessee is also required to file monthly returns with the Superintendent of the Central Excise [Rule 12 (1)] which can be scrutinised by the proper officer for correctness [Rule 12(3)]. While the proper officer is not defined in this Rule, since the return is to be filed with the Superintendent of Central Excise, such officer can only be understood to be the proper officer empowered to scrutinise the returns for correctness. Any Central Excise officer may exercise the powers and discharge the duties conferred or imposed under this Act on any other Central Excise Officer who is subordinate to him [Section 12E]. Evidently, the Rules have not conferred any powers on the officers of DGCEI to either assess the duty or to scrutinize the returns for their correctness. Therefore, the officers of DGCEI have no power either to assess the duty or to scrutinize the self assessment by the assessee. The power to scrutinize the returns filed by Blue Whale lies with its jurisdictional Superintendent and the power to scrutinize the returns filed 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 13 E/ 51558/2017, E/51052, 51053, 51054, 51059, 51096/2018 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 IV10 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 five years as applicable. As far as WHY is concerned, the SCN can be issued only if there is a non-levy, short levy, non-payment or short payment or erroneous refund of the duty. Section 11A does not provide for issue of notice so as to modify the assessment in any other way.
18. In this case, the value of the goods cleared by both Blue Whale and Unicorn was proposed to be reduced by the officers of DGCEI who do not have the power to even scrutinize the returns filed by the assessee. They propose to revise the 10 2019 (368) E.L.T. 216 (S.C.) 14 E/ 51558/2017, E/51052, 51053, 51054, 51059, 51096/2018 assessable value to a lower amount which is also not provided for under Section 11A.
19. DGCEI also proposed to revise the goods cleared by Blue Whale for export without filing any appeal against the assessment of the Shipping Bill before Commissioner (Appeals). It has been held by the High Court of Punjab and Haryana in Jairath International vs Union of India11 that once the Shipping Bill is assessed, the value in it cannot be modified except by filing an appeal against the assessment. In the case before the High Court, goods were exported under claim of drawback and the drawback was available as a percentage of the free on board (FOB) value of the exported goods. DRI received intelligence after their export that the goods were over-valued to claim higher drawback and accordingly a SCN was issued seeking to reduce the value of the goods already exported and thereby recover the excess drawback. The High Court held as follows:
15. Hon‟ble Supreme Court in ITC v. CCE (supra) has made it clear that self-assessment or assessment made by proper officer under Section 17 read with Section 2(2) of 1962 Act is an assessment so an importer is bound to file appeal under Section 128 for its modification if he wants to claim refund under Section 27 of the 1962 Act because Section 27 is sort of execution and while deciding refund application an Assistant Commissioner cannot modify assessment made at the time of import. Thus, it is evident that refund claims which were earlier entertained on admitted/conceded mistakes would not be maintainable without being corrected in appellate proceedings.
16. We on examination of the scheme of the 1962 Act and in view of the judgment of Hon‟ble Supreme Court in case of 11 2019 (370) E.L.T. 116 (P & H) 15 E/ 51558/2017, E/51052, 51053, 51054, 51059, 51096/2018 ITC v. CCE (supra) find that Rule 16 of Drawback Rules, 1995 is also in the nature of execution proceedings thus an 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 proper officer who used to frame assessment and w.e.f. 8-4-2011 he gets first opportunity to doubt the self-assessed value at the time of export and, secondly, he may prefer an appeal before Appellate Authority. A team of Customs officers at the time of export of goods verify different particulars including value declared by an exporter. The declared value may be accepted or re-assessed and in case re- assessed value is not accepted by exporter, proper officer has to pass speaking order. Thus, as per scheme of the 1962 Act, department is not remediless and Courts are bound to interpret law as such. Courts while interpreting law can neither add nor subtract any word from the plain language irrespective of consequences. It is the legislature who has to rectify, repair or amend the law in case any judgment interpreting law is not acceptable or is contrary to intent and purport of enactment.
17. On plain reading of Sections 17, 50 and 51 with Valuation Rules, 2007, we find that Respondent is neither vested with power of re-assessment of goods already exported under Rule 16 of Drawback Rules, 1995 nor Valuation Rules, 2007. The goods which stand exported do not fall within ambit of „export goods‟ as defined under Section 2(19) of 1962 Act, thus Respondent cannot invoke Rules 6 & 8 of Valuation Rules, 2007. In view of judgment of Hon‟ble Supreme Court in the case of ITC v. CCE (supra), we find that shipping bill either self-assessed or assessed by proper officer is amenable to appeal by both sides. Respondent by way of show cause notice under Rule 16 of the Drawback Rules, 1995 cannot modify assessed shipping bill.
18. Therefore, we hold that Respondent in terms of Rule 16 of Drawback Rules, 1995 as well Valuation Rules, 2007 has no power to reassess a shipping bill which was duly assessed by proper officer at the time of export of goods. In the present case, goods in question stood exported thus impugned order is not sustainable in view of our aforestated findings as well.
19. Accordingly, present writ petitions are allowed on all the counts, namely, limitation, absence of mechanism and lack of power to frame re-assessment of goods already exported; and 16 E/ 51558/2017, E/51052, 51053, 51054, 51059, 51096/2018 hence the impugned order dated 25-11-2016 (P-9) is hereby quashed. No costs.
20. For these reasons alone the show cause notice is not sustainable. However, we also proceed to decide the matter on merits.
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 has assumed the power to re- 17
E/ 51558/2017, E/51052, 51053, 51054, 51059, 51096/2018 determine the price when there is a transaction value. We do not find any authority of law under which DGCEI has the power to decide at what price goods should be sold by any assessee and what is a reasonable profit margin.
24. It has also been submitted by the Revenue that the entire excise duty paid by Unicorn will be refunded as per the Notification and Blue Whale will also get CENVAT credit of the duty paid and therefore, the goods were over-valued to pass on excess CENVAT credit. We find the scheme of the Notification available for manufacturer in Sikkim provides for refund of the entire duty paid and also allows CENVAT credit to the buyer. It does not confer any power on the DGCEI to modify or reduce the CENVAT credit of the duty paid by the supplier.
25. The second question is regarding the assessable value of the final products exported by Blue Whale. It is undisputed that the goods were cleared by Blue Whale and exported. Once the goods are exported the export value is available in the export documents including the shipping bills. Once shipping bill is assessed and goods are permitted to be exported, the only remedy available to the Revenue to seek modification of the shipping bill, is by filing an appeal before the Commissioner (Appeals) within time. The Commissioner has, in the impugned order correctly observed that no re-determination of the value of the goods exported has been done. In a nutshell, while Central Excise Act and the Customs Act provide for assessment based on transaction values subject to 18 E/ 51558/2017, E/51052, 51053, 51054, 51059, 51096/2018 some exceptions, the SCN has been issued by DGCEI replacing the transaction value with values which it considers fair and proper assuming not only the power of deciding what is a fair assessable value but also seeking to deny CENVAT credit available to the buyer by re-determining the value at the end of the supplier contrary to not only to the judicial precedents but also Board‟s Circular. This is beyond the powers conferred even on the Superintendent of Central Excise who has the mandate to scrutinise returns, let alone officers of DGCEI who have no jurisdiction even to scrutinise the Central Excise Returns for correctness.
26. For the aforesaid reasons, we find that impugned order is correct and calls for no interference. The impugned order is upheld and the appeals are rejected.
(Order pronounced on 18.04.2022) (JUSTICE DILIP GUPTA) PRESIDENT (P V SUBBA RAO) MEMBER (TECHNICAL) Tejo