Custom, Excise & Service Tax Tribunal
Cce, Chennai Iii vs M/S. Mira Textiles & Industries on 2 February, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
E/160/2002 and E/CO/21/2003
E/500/2002 and E/CO/150/2003
(Arising out of Order-in-Appeal No.134/2001 (M-III) dated 3.1.2002 and No. 68/2002 (M-III) dated 21.6.2002 passed by the Commissioner of Central Excise (Appeals),)
For approval and signature:
Honble Ms. Jyoti Balasundaram, Vice President
Honble Dr. Chittaranjan Satapathy, Technical Member
1. Whether Press Reporters may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether the Members wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
CCE, Chennai III Appellant
Vs.
M/s. Mira Textiles & Industries Respondents
Appearance Shri V.V. Hariharan, Jt. CDR, for the Appellant Shri M. Karthikeyan, Consultant for the Respondents CORAM Honble Ms. Jyoti Balasundaram, Vice-President Honble Dr. Chittaranjan Satapathy, Technical Member Date of Hearing: 02.02.2010 Date of Decision: 02.02.2010 Final Order No. ____________ Per Dr. Chittaranjan Satapathy Heard both sides.
2. The respondents manufacture kraft paper, part of which is sold outside, part of it is also sold to their sister unit for manufacture of corrugated paper board and paper cartons therefrom, another part is internally consumed for similarly making corrugated paper board and cartons therefrom. The dispute in these two appeals relates to sale of kraft paper to the sister unit and consumption of kraft paper internally for manufacture of corrugated paper board and cartons therefrom.
3. The respondents have taken the cost of production of the impugned kraft paper as Rs.10,250/- per MT for the period upto 29th April 1996 and have paid duty on such value derived from cost of production. They have also similarly adopted the value of Rs.10,250/- per MT to calculate the cost of corrugated paper board for paying duty thereon since the same is used for manufacturing cartons which are exempted from duty. For the later period, from 30.4.1996 till March 1998, they have adopted the price of kraft paper as Rs.10,840/- per MT which is higher than the earlier price of Rs.10,250/- per MT.
4. It is the Departments case that in the invoices for sale to the sister unit, the respondents have indicated the impugned goods to be kraft paper only. Hence, it is contended by the Department that the duty on which the impugned kraft paper and the corrugated paper board produced therefrom should be assessed to duty using the comparable value of kraft paper sold to independent buyers. Shri V.V. Hariharan, learned Jt. CDR arguing for the Department states that even though the Department has used the highest value of Rs.13,900/- per MT, the lowest comparable value of Rs.12,600/- per MT should atleast be adopted for the entire period.
5. Shri M.Karthikeyan, learned consultant appearing for the respondent states that though the relevant invoices describe the impugned goods as kraft paper, the respondents manufacture four types of kraft paper as follows:-
1. Uncoated kraft paper fluting media
2. Uncoated kraft paper non virgin
3. Uncoated kraft paper semi virgin
4. Uncoated kraft paper ribbed kraft He states that the impugned paper sold to the sister unit and also the paper which was used internally for making corrugated paper board and cartons therefrom was of the variety described as uncoated kraft paper fluting media. According to him, this category of paper is not sold outside. Similarly, he contends that the other three varieties of kraft paper which is sold outside are not used either by the respondents or by their sister unit for making corrugated paper board and cartons. He further states that a complete declaration of all the four varieties of kraft paper was furnished to the Department along with the classification declaration under the erstwhile Rule 173B. It is the case of the respondents that since a different kind of kraft paper was used for making the corrugated paper board internally as well as in their sister unit, there is no warrant in law to adopt the price for other kinds of kraft paper for the impugned kraft paper for assessment purposes. Since the comparable prices for uncoated kraft paper fluting media is not available, the method used by the respondents for arriving at the assessable value through cost construction method is proper and no additional duty demand is sustainable. The learned consultant also brings it to our notice that for valuation of the corrugated paper board, the Department is seeking to use the method of deductive value based on the price of cartons sold, which is not possible under the Valuation Rules.
6. After hearing both sides and perusal of the case records, we find that the respondents have declared the manufacture of uncoated kraft paper fluting media to the Department. Even though the invoices relating to sale of kraft paper to the sister unit mentions only kraft paper, no evidence has been adduced by the Department that the said kraft paper was of a different kind. Hence, it is difficult to sustain the Departments case that the respondents have cleared kraft paper on higher value to their sister unit or that they have used such paper of higher value for internal consumption. Moreover, since the Department was in the know of manufacture of uncoated kraft paper fluting media and three other categories of kraft paper and the respondents had indicated different prices for assessment purposes in their periodical returns, the demand made on them invoking extended period of time is also not sustainable. Thirdly, the valuation rules in force required valuation to be done on the basis of comparable price and if the same is not available on the basis of cost construction method. Hence, the duty paid by the respondents arriving at the assessable value using the cost construction method cannot be faulted with.
7. In view of our findings as above, we uphold the impugned orders and dismiss the appeals filed by the Department.
8. The cross-objections are also disposed of accordingly.
(Dictated and pronounced in open court)
(Dr. Chittaranjan Satapathy) (Jyoti Balasundaram)
Technical Member Vice President
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