2016 (1) TMI 688 - AT - Central Excise

Classification - whether Castor Compound is nothing but Castor Oil falling under Tariff Item 15180019 and exempted under Notification no. 3/2006-CE at sr. no. 11? - Held that - We find that neither the classification nor the availability of exemption on this compound is disputed from the adjudication order dt. 27.12.2011. We find that the appellant had submitted before the authorities that the Castor Oil compound is exempted from excise duty under the said notification. From the adjudication order as well as the order of Commissioner (Appeals) it is seen that this point was ignored by the authorities. It is also brought to our notice that the demands for the different periods were set aside under Order-in-Appeals dt. 14.10.2013, 26.02.2014 and 22.12.2014.

Summary

Issues:
1. Duty payment on captively consumed "Castor Compound"
2. Discrepancy in valuation for duty payment
3. Availability of exemption on "Castor Compound"

Analysis:

Issue 1: Duty payment on captively consumed "Castor Compound"
The appellant, engaged in manufacturing Cable Jointing Kits, used inputs like "Castor Compound" for assembly. The appellant paid duty on the captively consumed compound based on 110% of the cost of production as per Rule 6 of the Central Excise Valuation Rules, 2000. The Revenue contended that duty should be paid based on the market selling price of the goods, leading to a differential demand for the period April 2010 to September 2010.

Issue 2: Discrepancy in valuation for duty payment
The dispute arose regarding the valuation of the "Castor Compound," identified as Castor Oil falling under Tariff Item 15180019 and exempted under Notification no. 3/2006-CE at sr. no. 11. The authorities ignored the appellant's submission that the compound was exempted from excise duty under the said notification. The demands made by the authorities were set aside in various orders-in-appeals, highlighting the discrepancy in valuation and non-consideration of the exemption.

Issue 3: Availability of exemption on "Castor Compound"
The Tribunal noted that neither the classification nor the availability of exemption on the compound was disputed. The appellant had previously informed the authorities about the exemption under Notification no. 3/2006-CE, which was overlooked in the adjudication order and the Commissioner (Appeals) decision. As the product was exempted, the Tribunal concluded that there was no basis for a demand of duty. Consequently, the impugned order was set aside, and the appeal was allowed.