2012 (7) TMI 54 - AT - Central Excise

Defect in adjudication order Corrigendum issued - the contention of the appellants that the duty liability is fastened by issuing a Corrigendum without affording opportunity of hearing whereas in the adjudication order the differential duty is demanded from Contractor Held that - The Corrigendum by which the duty liability now stands confirmed against M/s Kilitch Co (Pharma) Ltd cannot be considered as the Corrigendum is a total departure from the confirmation of duty demand in the adjudication order which was against M/s Kilitch Drugs (I) Ltd - the matter requires reconsideration by the adjudicating authority afresh - order is set aside and the matter is remanded back.

Issues:
1. Duty liability on the appellant M/s Kilitch Company (Pharma) Ltd.
2. Validity of Corrigendum issued without affording an opportunity of hearing.
3. Interpretation of the principles laid down by the Hon'ble Supreme Court in previous cases.
4. Assessment of control over manufacturing and assessable value of goods.

Analysis:

1. Duty Liability: The case involves a dispute over duty liability concerning the manufacturing of medicament under Chapter 30 of the Central Excise Tariff on a job work basis. The appellants, M/s Kilitch Company (Pharma) Ltd and M/s Kilitch Drugs (I) Ltd, were issued a Show Cause Notice demanding a differential duty, which was confirmed by the adjudicating authority. The Commissioner (Appeals) dismissed the appeals challenging the duty demand. The appellants argued that the duty liability was incorrectly imposed on M/s Kilitch Company (Pharma) Ltd through a Corrigendum without proper consideration.

2. Validity of Corrigendum: The appellants contended that the duty liability was shifted to M/s Kilitch Company (Pharma) Ltd through a Corrigendum without providing an opportunity of hearing. The Tribunal noted that the Corrigendum altered the duty demand from M/s Kilitch Drugs (I) Ltd to M/s Kilitch Company (Pharma) Ltd, which necessitated reconsideration by the adjudicating authority. The Tribunal set aside the impugned order and remanded the matter for fresh consideration with proper hearing and consideration of relevant legal decisions.

3. Interpretation of Legal Principles: The appellants relied on legal precedents, including the case of Ujjagar Prints and subsequent cases like Pawan Biscuits Co Pvt Ltd vs CCE, Patna and Remidex Pharma Ltd vs Commissioner. They argued that they were paying duty appropriately based on the principles established by the Hon'ble Supreme Court in these cases. The Revenue, however, contended that various expenses should be included in the assessable value of goods manufactured by M/s Kilitch Company (Pharma) Ltd due to the control exerted by M/s Kilitch Drugs (I) Ltd over the manufacturing process.

4. Assessment of Control and Assessable Value: The Revenue emphasized that M/s Kilitch Drugs (I) Ltd had significant control over the manufacturing process of M/s Kilitch Company (Pharma) Ltd, leading to the inclusion of additional expenses in the assessable value of the goods. The Show Cause Notice was issued based on the selling price of goods by M/s Kilitch Drugs (I) Ltd. The Tribunal found that the matter required fresh consideration by the adjudicating authority, highlighting the need for a proper assessment of control and assessable value in line with the legal principles and precedents cited by the appellants.

In conclusion, the Tribunal remanded the case for reconsideration, emphasizing the importance of providing a fair hearing, considering relevant legal decisions, and ensuring a correct assessment of duty liability based on control and assessable value factors.

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