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2015 (11) TMI 91 - AT - Central ExciseValuation - Captive consumption - computation of value as per Rule 6(b)(ii) of old Rules or Rule 8 of the new Rules - non inclusion of certain expenses - Cenvat Credit - Supplementary invoices - Invocation of extended period of limitation - suppression of facts and willful mis-statement - Held that - for the period upto 30/06/2000 the value has to be determined as per the Board s circular 1996 and thereafter as per CAS-4. We also note that value as per CAS-4 generally works out to be much lower compared to earlier method. CAS-4 does not consider many components such as interest and financing components as cost of production, even though in real life if the goods were to be sold, manufacturer will include these components. - For the period prior to 01/07/2000 the value determined by the Commissioner is correct and we uphold the same. As far as computation of value after 01/07/2000 is concerned the same can be computed as per CAS-4. We also note that respondent-assessee has not produced any such costing details/CAS-4 certificate during adjudication or before this Tribunal. In fact, from May, 2001 onwards, respondent-assessee has accepted 1996 circular, paid differential duty and took credit of same in other plant. However, it is not clear whether entire differential duty was paid or only part of it was paid. If entire duty was paid and credit thereof taken in other plant, those assessment need not be disturbed. However, if not, respondent-assessee will be required to submit the CAS-4 certificate from Cost Accountant supported by the details which may be examined by the Commissioner. Commissioner is free to take necessary help from Asstt. Director (Cost), if considered necessary. If the monthwise duty paid (and credit taken) is more than computed as per CAS-4, same need not be disturbed at this stage. Extended period of limitation - Held that - Since the respondent-assessee themselves are following the circular of 1996 and were not disputing any part of the circular, it was their boundan duty to compute the value strictly as per the circular. In the present facts and circumstances of the case, we find that though the respondent-assessee was purportedly following the circular but were including only few components in the category of overheads and were excluding other components, some of which were specifically listed in the circular and were to be included as per the circular of 1996 and these facts were in the exclusive knowledge of the respondent-assessee. In fact, it also appears that after computing the overheads in percentage in the above manner, they were just giving these figures (i.e. amount or %)to the Chartered Accountant who in turn were issuing the certificate without going into the question which are the items of expenditure within the category of overheads which have been included or excluded. We find that it is an admitted position that in the price declaration submitted to the department they were only indicating in terms of percentage overheads i.e., overheads constitute 3.34% as against the actual computation of 33.7%. For purpose of computation of value, the details provided by any assessee are normally accepted until and unless there is intelligence to the contrary. This is a clear-cut case of suppression of facts with willful intention to evade payment of duty and hence extended period of limitation is correctly invokable and for the same reason penalty under Section 11AC is also impossable. Demand of duty up to 30/06/2000 as proposed in the notice is confirmed. Penalty of equal amount under Section 11AC/Rule 173Q as proposed in the show cause notice is also confirmed. Demand of duty from 01/07/2000 to 31/03/2001 is required to be computed based upon the value determined under CAS-4. Respondent-assessee will provide within three months from the receipt of order the necessary certificate from the Cost/Chartered Accountant along with details which will be examined by the Commissioner as per our directions in earlier part of this order. The quantum of short-levy (from July 2000 to March, 2001) will there after be arrived. Respondent-assessee will be liable to penalty equal to the amount of short-levy so determined under Section 11AC/173Q. In case, respondent-assessee fails to produce details as per CAS-4 short-levy as proposed in the show cause notice along with penalty will stand confirmed. As far as second and subsequent show cause notices are concerned, value is to be determined as per CAS-4 and thereafter duty leviable. If there is short-levy, the same will be paid by the respondent-assessee. In case, respondent-assessee fails to produce details as per CAS-4, short-levy as proposed in the show cause notice will stand confirmed. No penalty under Section 11AC/Rule 173Q/Rule 25 will be impossable. - confiscation is not warranted. Similarly, penalties in other notices are also not warranted. - Decided substantially against the assessee.
Issues Involved:
1. Extended period of limitation and penalty under Section 11AC. 2. Determination of assessable value for captively consumed goods. 3. Eligibility of CENVAT credit on supplementary invoices. 4. Applicability of CAS-4 for cost determination. 5. Revenue neutrality and its impact on intent to evade duty. 6. Alleged suppression of facts and willful mis-statement. Detailed Analysis: Extended Period of Limitation and Penalty under Section 11AC: The Revenue appealed against the Commissioner's decision to drop the demand for the extended period of limitation and the penalty under Section 11AC. The Commissioner upheld the demand on merits but dropped the extended period citing the Department's previous acceptance of CA certificates, the availability of records, and the issue of interpretation. The Tribunal found that the respondent-assessee had understated overheads, thus constituting suppression of facts with the intent to evade duty. Consequently, the extended period of limitation and penalty under Section 11AC were deemed applicable. Determination of Assessable Value for Captively Consumed Goods: The dispute centered on the computation of the assessable value of captively consumed goods as per Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975, and Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. The Commissioner found that the respondent-assessee had not included several expenses in the cost of production, which was confirmed by the Chartered Accountant's admission. The Tribunal upheld the Commissioner's decision for the period up to 30/06/2000 but directed the computation of value post-01/07/2000 as per CAS-4. Eligibility of CENVAT Credit on Supplementary Invoices: The Revenue contested the eligibility of CENVAT credit taken by the first manufacturing unit based on supplementary invoices issued during the investigation. The Tribunal, following the Karnataka High Court's decision in Karnataka Soaps & Detergents Ltd., held that Rule 7(1)(b) of the CENVAT Credit Rules, 2001/2002, cannot place fetters on Rule 3, thus allowing the credit. Applicability of CAS-4 for Cost Determination: For the period after 01/07/2000, the Tribunal directed the computation of the assessable value as per CAS-4, noting that the respondent-assessee had not provided any CAS-4 certificate during adjudication or before the Tribunal. The respondent-assessee was required to submit a CAS-4 certificate from a Cost Accountant for the period from July 2000 to March 2001. Revenue Neutrality and Its Impact on Intent to Evade Duty: The respondent-assessee argued that the entire exercise was revenue neutral as the duty paid by Plant II and III was available as CENVAT credit to Plant I. The Tribunal rejected this argument, stating that the theory of revenue neutrality would apply to all captive consumption cases, which is not permissible under law. Alleged Suppression of Facts and Willful Mis-Statement: The Tribunal found that the respondent-assessee had understated the overheads while pretending to follow the 1996 circular, thus constituting suppression of facts with the intent to evade duty. The Tribunal noted that the respondent-assessee had not provided plant-wise or product-wise details of indirect overheads/costs, leading to the inclusion of overall figures by the Revenue. Conclusion: The Tribunal confirmed the demand of duty up to 30/06/2000 as proposed in the notice and imposed a penalty of equal amount under Section 11AC/Rule 173Q. For the period from 01/07/2000 to 31/03/2001, the duty was to be computed based on the value determined under CAS-4. The Tribunal dismissed the second appeal of the Revenue related to the eligibility of CENVAT credit on supplementary invoices, following the Karnataka High Court's decision. The Tribunal also rejected the respondent-assessee's contention to avail the benefit of Notification 67/1995 without following its procedures. The appeals and cross-objection were disposed of in the specified terms.
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