Custom, Excise & Service Tax Tribunal
Ici Chemicals Ltd vs Commissioner Of Central Excise, ... on 7 September, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL Nos. E/2200 & 2201/05 (Arising out of Order-in-Original No. 48/Commr/04-05 dated 9.3.2005 passed by Commissioner of Central Excise, Mumbai) For approval and signature: Honble Mr. P.K. Jain, Member (Technical) and Honble Mr. S.S. Garg, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No 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 Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== ICI Chemicals Ltd. Appellant Vs. Commissioner of Central Excise, Belapur Respondent Appearance: Shri Rajesh Ostwal, Advocate, for appellant Shri Ashutosh Nath, Assistant Commissioner (AR), for respondent CORAM: Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S.S. Garg, Member (Judicial) Date of Hearing: 11.8.2015 Date of Decision: 7.9.2015 ORDER NO Per: P.K. Jain
Brief facts of the case are that the appellant has two manufacturing units, one located at Thane and another at Ennore near Chennai. At the appellants unit at Thane, they were manufacturing two items named as AE-1 and AE-2 which are surface active agents classifiable under Chapter 34. The said items were being transferred to their unit in Ennore. Similar goods were not being sold to any independent buyer. In the Ennore unit these goods were in turn used for further manufacturing process. The goods were being supplied by the Thane unit to Ennore unit from 1986 onwards. Further, the goods were being cleared without payment of duty being exempted under Notification No.101/66-CE dated 17.6.1966. During 1991, these goods were being transferred at a notional price of Rs.90/- per kg. With effect from 25.7.1991, the exemption on the goods was withdrawn by the Government and the goods became liable to duty. Appellants unit in Thane dropped the prices from Rs.90/- per kg. to Rs.62/- per kg. and cleared the same on payment of duty at Rs.62/- per kg. The appellant filed price list under proforma 2 which is applicable for clearance to other industrial units and declared the said price. The facts that these were going to their own unit and there was no sale involved were suppressed. Later on, it came to the light that in addition to the amount indicated in the invoices, Thane unit was also raising the debit notes to the Ennore unit on quarterly/half yearly basis. Investigations were taken up about the amounts involved. The Thane unit claimed that they have provided certain technical know how to the Ennore unit so as to reduce the use of AE 1 and AE 2 in the manufacture of emulsifier which was being produced by the Ennore unit. However, they could not produce any agreement or any other tangible evidence in support of the said contention. Statements of certain persons were recorded. The officials at the Ennore unit denied knowledge of any such things. The officials at the Thane unit could not indicate the basis of raising debit notes of different amounts for different periods. Revenue, after investigation, issued a show cause notice considering the amount recovered by such debit notes as additional consideration for computing the value and raised the demand. The case was adjudicated by the Commissioner who confirmed the duty, interest, penalty etc. Aggrieved by the said order, the appellant filed appeal before this Tribunal.
2. This Tribunal vide order No. 3100 to 3107/WZB/1998/C-I dated 29.7.1998 remanded the matter to the Commissioner with a direction that the value should be computed under Rule 6 of the erstwhile Central Excise Valuation Rules. Consequent to the said direction, the impugned order is issued.
3. Learned counsel for the appellant submitted that the direction of the Tribunal was to compute the value under Rule 6 of the Central Excise Valuation Rules. Instead of following the CESTAT direction, the Commissioner has in his order has indicated that certain facts were suppressed from the CESTAT at the time of passing the said order and went on to reconfirm the demand in the guise of Rule 6 and the CESTAT direction. He submitted that they have submitted a Chartered Accountants certificate during the hearing. The said certificate was not questioned or looked by the Commissioner and he went by the theory that the debit note raised will form part of the assessable value and confirmed the demand etc.
4. Learned AR, on the other hand, submitted that it is not disputed by the appellant that just before the goods became dutiable, they were raising invoices @ Rs.90/- per kg. but after the goods became dutiable, the prices were suddenly dropped to Rs.62/- per kg. It is interesting to note that the final product at their Ennore factory was not dutiable and thus the prices were reduced in order to evade the duty. Even the price declarations were not filed in the correct proforma and at the time of filing of the price list, the fact that the goods are being sent to their own unit was not mentioned and the relevant proforma supported by the Cost Accountant was not submitted. The learned AR further submitted that the officials of the Ennore plant expressed their ignorance about any technical know how being supplied by the Thane unit so as to reduce the use of the product AE-1 and AE-2 in the manufacturing process. It was further submitted that the officials at the Thane unit even could not tell the basis on which the debit notes were raised and no agreement was produced. The learned AR submitted that even when any debit notes are raised or invoices are raised by one profit centre to another profit centre within the same organization, such invoices or debit notes are based upon certain facts and are not raised in vacuum. In the present cases, these debit notes certainly indicate that these debit notes are pertaining to the prices charged or indicated by Thane unit to their Ennore unit. He further submitted that in the facts and circumstances of the case, the said amount will form part of the assessable value.
5. We have considered the submissions of both the sides. We have also gone through this Tribunals order dated 29.7.1998. In the said order, this Tribunal has directed that it will be appropriate for the adjudicating authority to re-examine the matter in terms of Rule 6 and give an appropriate finding and the matter was remanded for the said purpose. We find from the impugned order that it is not disputed that there was no sale of goods between the Thane unit and Ennore unit. It is also noted in the order that the goods AE-1 and AE-2 were not sold to any independent buyer. Under the circumstances, in our view, the only method to find out the value will be based upon cost of production. We find in the present case the appellant has submitted some certificates during the adjudication. However, these have not been examined by the Commissioner or by the costing expert i.e. Assistant Director (Cost) with reference to the relevant circulars of the Board available at that point of time.
6. Under the circumstances, we set aside the order passed by the Commissioner and remand the matter back to the Commissioner to examine the certificates produced by the appellant and if necessary, ask the appellant to submit the supporting balance sheet and any other details required relating to the Thane unit as also Ennore unit and based upon such details, the balance sheet and the Chartered Accountants certificate, the matter may be referred to the costing expert i.e. Assistant Director (Cost) or any other appropriate authority and thereafter determine the value as per old Rule 6 of the Central Excise Valuation Rules. While determining the value under the said Rules, the facts which have come out during the investigation can be examined for the purpose of determining the cost of production.
7. The appeals are disposed of by way of remand in above terms.
(Pronounced in Court on 7.9.2015) (S.S. Garg) Member (Judicial) (P.K. Jain) Member (Technical) tvu 1 7