2014 (12) TMI 152 - AT - Central Excise

Waiver of pre deposit - Valuation of goods - Method of valuation - whether the cost of production in CAS-4 format is to be determined on annual basis when all the data for this format is available or it could be determined for month to month basis - Held that - The appellant during a particular financial year, instead of determining the cost of production for the entire year in CAS-4 format, have determined the same from time to time as and when the cost of the raw materials changed. The information regarding duty payment during each month during the period of dispute, placed on record by the appellant clearly shows that if the cost of production is determined in CAS-4 format on annual basis, as sought by the Department and 110% of such cost of production is adopted, the assessable value, while during certain months there would be excess payment of duty, during other months there would be short payment of duty. It is also seen that if the excess duty paid is adjusted against the short payment there is net excess duty payment. Excess payment during certain months has to be adjusted against short payment during other months. In view of this, we hold that the appellant have strong prima facie case in their favour - Following decision of CCE, Panchkula v. Yamuna Gases & Chemicals Ltd. 2011 (7) TMI 984 - CESTAT, NEW DELHI - Stay granted.

Summary

Issues:
1. Dispute over determination of cost of production for Central Excise duty on iron ore concentrate.
2. Allegations of short payment of duty and suppression of value by the appellant.
3. Adjudication by Commissioner confirming duty demand, interest, and penalty.
4. Appeal against Commissioner's order and stay application filed by the appellant.

Analysis:

Issue 1: Dispute over determination of cost of production
The appellant manufactured iron ore concentrate at one plant and transferred it to another unit for further processing. The dispute arose regarding the method of determining the cost of production for Central Excise duty payment. The Department contended that the cost of production should be determined annually in CAS-4 format, while the appellant calculated it based on changes in raw material prices. The appellant argued that they paid duty based on 110% of the cost of production and had a strong prima facie case as they had paid more duty than required in certain months. The Tribunal noted that the excess duty paid in some months should be adjusted against any short payments in other months, citing a relevant judgment.

Issue 2: Allegations of short payment of duty and suppression of value
The Commissioner adjudicated a show cause notice, confirming duty demand, interest, and penalty on the appellant. The Commissioner found that the appellant had not paid duty correctly, leading to the suppression of the value of goods cleared for captive consumption and resulting in short payment of duty. The appellant filed an appeal against this order, challenging the findings and penalties imposed.

Issue 3: Adjudication by Commissioner and imposition of penalties
The Commissioner's order-in-original dated 31-3-2013 confirmed the duty demand, interest, and penalty on the appellant under Section 11AC. The Commissioner observed that the appellant had not paid duty accurately, leading to the imposition of penalties. The appellant contested these findings in their appeal, seeking relief from the duty demand, interest, and penalties imposed.

Issue 4: Appeal against Commissioner's order and stay application
The appellant filed an appeal against the Commissioner's order and also submitted a stay application. The appellant's counsel argued that they had a strong case as they had paid more duty than required in certain months. The Department opposed the stay application, maintaining that excess duty paid could not be adjusted against short payments. After considering both sides' submissions and perusing the records, the Tribunal allowed the stay application, waiving the pre-deposit of duty demand, interest, and penalty until the appeal's disposal.

In conclusion, the Tribunal granted relief to the appellant by allowing the stay application and waiving the pre-deposit requirements, based on the strong prima facie case presented by the appellant regarding the determination of the cost of production and the adjustment of excess duty payments against short payments as per relevant legal precedents.