2015 (4) TMI 385 - HC - Central Excise

Challenge to the show cause notice - Valuation of goods - alternate remedy - supply of cement to their own ready-mix concrete units for captive consumption - captive consumption - Held that - The duty of excise is chargeable on excisable goods with reference to their value then on each removal of the goods the value shall be determined. In a case where the goods are sold by the assessee for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for sale, it would be the transaction value for the purposes of computation of duty chargeable on the excisable goods. In any other case, including where the goods are not sold, the value has to be determined in accordance with the manner prescribed. Adjudicating Authority will bear in mind the clear language of these Rules and the sub-rules, if any. There is nothing and after the clarification by Mr. Kantharia , by which the petitioners cannot expect a fair adjudication. Once there are circulars in place which also take into consideration the situation which may have to be dealt with and for guiding the Revenue officials and particularly clauses like clause 29 of the circular dated 30th June, 2000, devise some scheme, then that is bound to be taken note of. In the circumstances, we do not think that the respondents will be only guided by the view taken in the larger Bench decision of the Tribunal. That may have been referred to in the show cause notice, but it is always open for the petitioners to contend that the Tribunal decision cannot have any application to their case. Further, it can be urged that the Tribunal decision cannot be said to be running contrary to or overriding any circulars which , according to the petitioners, bind the department or Revenue. All contentions of the petitioners, including based on the grounds in the writ petition are, therefore, kept open and for being raised - Petition disposed of.

Summary

Issues Involved:
1. Validity and legality of Show Cause cum Demand Notices.
2. Application of Rule 8 versus Rule 4 for valuation of excisable goods.
3. Binding nature of departmental circulars on the Revenue.
4. Availability of alternate and equally efficacious remedies.
5. Adjudicating Authority's obligation to consider all objections and legal provisions.

Detailed Analysis:

1. Validity and Legality of Show Cause cum Demand Notices:
The petitioners sought a writ of Certiorari to quash the Show Cause cum Demand Notices, arguing they were contrary to departmental circulars dated 30.6.2000 and 1.7.2002. They also sought a writ of prohibition to prevent further proceedings based on these notices. The petitioners contended that the notices were issued based on a misunderstanding of the law by the Revenue and that their actions complied with Rule 8 of The Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.

2. Application of Rule 8 versus Rule 4 for Valuation of Excisable Goods:
The core issue revolved around whether the assessable value of cement cleared to ready-mix concrete units should be determined under Rule 8 or Rule 4. The petitioners argued that Rule 8, which applies to captive consumption, was the correct rule, as they cleared cement to their own units for further manufacture. The Revenue, however, believed Rule 4 was applicable. The petitioners emphasized that Rule 8 had been interpreted by departmental circulars, which should bind the Revenue.

3. Binding Nature of Departmental Circulars on the Revenue:
The petitioners relied heavily on departmental circulars and Supreme Court judgments (e.g., Commissioner of Central Excise vs. Dhiren Chemical Industries) to argue that these circulars were binding on the Revenue. They contended that the Revenue could not deviate from these circulars when determining the assessable value of goods. The petitioners also referenced the larger Bench decision in Ispat Industries Limited, arguing it was contrary to a High Court judgment and should not override the circulars.

4. Availability of Alternate and Equally Efficacious Remedies:
The Revenue raised a preliminary objection that the writ petition should not be entertained because the petitioners had alternative remedies under The Central Excise Act, 1944. The Revenue argued that the court should not interfere at the stage of a show cause notice, especially when there were disputed questions of fact. The court acknowledged this but noted that the Adjudicating Authority would fairly consider all objections raised by the petitioners.

5. Adjudicating Authority's Obligation to Consider All Objections and Legal Provisions:
The court emphasized that the Adjudicating Authority must consider all objections, including the applicability of Rule 8 and the binding nature of departmental circulars. The court clarified that the Adjudicating Authority should render its findings uninfluenced by the show cause notice allegations and should not be completely bound by the Tribunal's view. The Authority must also consider the petitioners' arguments that the Tribunal decision does not apply to their case or override the circulars.

Conclusion:
The court disposed of the writ petition, clarifying that all contentions of the petitioners and the Revenue were kept open for adjudication. The court expressed no opinion on the merits but emphasized that the Adjudicating Authority must consider the legal provisions, departmental circulars, and all objections raised by the petitioners. The court's decision ensures that the petitioners have a fair opportunity to present their case during the adjudication process.