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***** 3.9.2 In view of this discussions and findings given in the foregoing Paras, it is observed that the Noticee has not determined the correct assessable value and has failed to disclose the correct assessable value in their ER-1 Returns filed for the period from Mar-2011 to Mar-2015 without ascertaining the correct Cost of Production and also failed to discharge the correct Central Excise Duty on 110% of the CAS-4 value on Coal cleared to its related unit M/s. Jindal Steel and Power Ltd., Raigarh in terms of Rule 8 of the Valuation Rules, 2000 read with Section 4(1)(b) of the Central Excise Act, 1944. Accordingly, the demand raised under the impugned Show Cause Notice is liable to be confirmed on this count. Held Accordingly."

(emphasis supplied) E/51511/2018

30. The findings recorded by the Principal Commissioner in respect of the second issue are as follows:

(ii) Invocation of extended period "3.10. The Noticee in its defense also contested the invocation of extended period of limitation. In the instant case, it is observed that the Noticee has not disclosed the removal of impugned goods for the captive consumption/to the related persons. It has also suppressed the cost of production and failed to discharge the correct duty payable on 110% of CAS-4 value on coal cleared to its unit in terms of Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000; the Central Excise Rules, 2002 read with Section 4(1)(b) of Central Excise Act 1944. Further, it has not reflected the correct "transaction value" in their ER-1 Returns filed for the said period. These omissions of the Noticee came to the knowledge of the department only during enquiry and initiation of investigation in the case. Thus, the Noticee has suppressed the material facts from the knowledge of department and have deliberately not paid central excise duty on appropriate transaction value on coal extracted from mines. Accordingly, it has contravened the provisions of Rule 4, Rule 6 and Rule 8 of Central Excise Rules, 2002. Therefore, extended period of limitation as provided under Section 11A(4) of Central Excise Act 1944 is rightly invoked in the instant case for the recovery of Central Excise duty."

42. The learned special counsel for the department also raised an issue that the value of Middlings shown in the CAS-4 statement is different from the assessable value shown in the chart at page 233 of the appeal memo.

43. According to the appellant, in the CAS-4 statements prepared by the Cost Accountant, the net realizable value of the by-products produced during the washing process was deducted while computing the cost of production of Washed coal. In any view of the matter, the appellant had in the returns filed before the Coal Controller clearly indicated the amount of Middlings that were supplied to JSPL plant on a month to month basis.

E/51511/2018

50. To examine whether the extended period of limitation could have been invoked, it would be appropriate to first reproduce allegations made in the show cause notice on this issue and the same is as follows:

"19. As discussed in foregoing paras, it appears that the Noticee is a captive mines and it has undervalued its cleared coal with intent to evade payment of central excise duty. The Noticee appears to have not determined the correct assessable value and has failed to discharge the correct duty payable in the period-2010-11 (03/2011) to 2014-15. Thus the Noticee appears to have suppressed the cost of production and failed to discharge the correct duty payable on 110% of CAS-4 value on coal cleared to its unit in terms of Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 in accordance to Rule 8 of the Central Excise Rules, 2002 read with Section 4(1)(b) of Central Excise Act 1944. The Noticee was required to pay the duty on the 110% of cost of production charges as a part of cost of production in terms of Rule 8 of the Valuation (Determination of Price of Excisable Goods) Rules 2000. Further, the Noticee also appears to have not reflected the correct "assessable value" in its ER-1 Returns filed for the said period. Non furnishing of actual amount of assessable value in its ER-1 Returns amounts to suppression of facts with intent to evade duty. Further non-payment of duty on 110% of CAS-4 value has not been disclosed by the Noticee on its own to the department, but noticed by the department only when an enquiry was initiated in this case. Again the Noticee appears to have suppressed the actual assessable value by not determining the correct 110% of CAS-4 value according to Rule 8 of Central Excise Valuation (determination of price of Excisable goods) Rules 2000 during 2010-11 (Mar'2011) to 2014-15. Therefore, that Noticee appears to have contravened the provisions of Rule 4, Rule 6 & Rule 8 of the Central Excise Rules, 2002 and E/51511/2018 Rule 8 of Central Excise Valuation (determination of price of Excisable goods) Rules 2000 read with Section 4(1)(b) of the Central Excise Act, 1944, by not paying correct duty and interest thereon with intent to evade duty, hence extended period of 5 years is invokable for recovery of duty short paid Rs. 44,44,80,045/- (Basic Excise Duty Rs. 43,15,34,024/- Edu. Cess Rs. 86,30,680/-, H.E. Cess Rs. 43,15,340/-) under Section 11A(4) of the Central Excise Act 1944 alongwith interest as applicable under Section 11AB/11AA of the Central Excise Act, 1944."