2018 (2) TMI 1869 - AT - Central Excise

Valuation - product Special Denatured Spirit - product transferred to other units for manufacture of further products which have also been cleared on payment of duty - Held that - There is no allegation in the SCN that the appellant have valued their goods, transferred to other units, at a value lesser than the value as per CAS-4 standards - the SCN is vague - appeal allowed - decided in favor of appellant.

Summary

Issues:
Undervaluation of Special Denatured Spirit transferred to other units for further products.

Analysis:
The appeal addressed the issue of undervaluation of Special Denatured Spirit (SDS) transferred to other units for further products. The appellant was accused of undervaluing the SDS with the intention to evade duty. The Show Cause Notice alleged that the appellant had suppressed vital facts regarding the value of Denatured Ethyl Alcohol or SDS, resulting in duty evasion amounting to a substantial sum. The Notice proposed the recovery of the duty amount along with penalties and interest for the period 2003-04 to 2005-06.

The case was adjudicated by the Commissioner, who confirmed the proposed demand and imposed an equal amount of penalty. The appellant challenged this decision before the Tribunal. The appellant's counsel argued that the Show Cause Notice did not specifically mention undervaluation based on Cost Accounting Standards-4 (CAS-4) guidelines. They contended that goods transferred between units for self-consumption should be valued as per CAS-4. The counsel relied on the Supreme Court ruling in the case of Commissioner of Central Excise Versus Cadbury India Ltd., emphasizing the strict adherence to CAS-4 for determining the cost of production of captively consumed goods.

After hearing arguments from both sides, the Tribunal found that the Show Cause Notice lacked specific allegations regarding undervaluation based on CAS-4 standards. Therefore, the Tribunal deemed the Notice vague and not maintainable. Consequently, the impugned order confirming the demand and penalties was set aside, and the appeal was allowed in favor of the appellant. The Tribunal ruled that the appellant should be entitled to consequential benefits as per the law.

In conclusion, the Tribunal's decision centered on the lack of specific allegations in the Show Cause Notice regarding undervaluation based on CAS-4 standards, leading to the Notice being deemed vague and the appeal being allowed in favor of the appellant.