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2014 (4) TMI 333 - AT - Central ExciseWaiver of pre-deposit - demand of duty on Captive consumption of agarbathi masala for manufacturing of agarbathi - valuation - Penalty under Rule 25 - Held that - in the absence of any proof to show that the earlier data was as per CAS-4 requirements and whether revised figure is not as per CAS-4 has not been considered. In our opinion, since the issue has heavy implication, these aspects need to be considered by the Commissioner in greater detail and if necessary the verification of details or whatever data required by the Commissioner can be called for and we feel that if the appellant has made a mistake while replying to the earlier show-cause notice and while defending the earlier show-cause notice and if the mistake is genuine, they should not be made to suffer and be liable for paying duty for mistake throughout their existence. Therefore, we remand the matter with a request to the Commissioner to consider the matter afresh and give an opportunity to the appellant to present their case and also requiring the appellants to produce whatever information is required for coming to a proper conclusion - matter remanded back.
Issues:
1. Classification of agarbathi manufacturing process under Central Excise Tariff Act. 2. Dispute regarding the demand for duty and penalty imposed. 3. Consideration of CAS-4 certificate and CENVAT credit by the Commissioner. Issue 1: Classification of agarbathi manufacturing process under Central Excise Tariff Act The judgment involves a dispute concerning the classification of the manufacturing process of agarbathi under the Central Excise Tariff Act. The Appellant, engaged in agarbathi manufacturing, faced proceedings due to the captively consumed agarbathi masala being considered a marketable and excisable product. This led to a demand for duty exceeding Rs.11 crores for a specific period, with an additional penalty imposed under Rule 25 of the Central Excise Rules, 2002. The Appellant argued that the agarbathi masala was captively consumed and thus chargeable to nil duty, highlighting discrepancies in data provided to the Commissioner and the subsequent rectification of mistakes. Issue 2: Dispute regarding the demand for duty and penalty imposed The Appellant contended that the Commissioner did not consider the CAS-4 certificate provided by them, which led to an inflated demand for duty. The Appellant emphasized that the Commissioner failed to recognize the rectification of mistakes in the data provided and did not account for the benefit of CENVAT credit. The Tribunal acknowledged the importance of the CAS-4 certificate, emphasizing that the Commissioner should have considered it as per the Circular issued by the Board. The Tribunal found merit in the argument that the demand had increased significantly due to the Commissioner's oversight, leading to a decision to remand the matter for a fresh consideration by the Commissioner. Issue 3: Consideration of CAS-4 certificate and CENVAT credit by the Commissioner The Commissioner's observations highlighted the requirement for valuation of agarbathi masala in accordance with Rule 8 of the Valuation Rules, emphasizing the need for specific cost details and profit margins as per CAS-4 norms. The Commissioner raised concerns regarding the information provided by the Appellant, indicating a lack of records related to production, clearance, and consumption of raw materials. The Appellant clarified that they were willing to provide details and did not claim any trade secret. The Tribunal noted discrepancies in the cost of production figures provided by the Appellant, urging the Commissioner to conduct a detailed examination of the data and consider the CAS-4 requirements thoroughly. The Tribunal remanded the matter to the Commissioner for a fresh evaluation, emphasizing the need for a comprehensive review and the consideration of the Appellant's submissions, including the request for CENVAT credit. In conclusion, the judgment addresses issues related to the classification of agarbathi manufacturing, the demand for duty and penalty, and the consideration of the CAS-4 certificate and CENVAT credit by the Commissioner, ultimately leading to a decision to remand the matter for a detailed reevaluation.
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