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2021 (2) TMI 82 - AT - Central ExciseValuation - applicability of Rule 4 of the Valuation Rules or Rule 8 - appellant has cleared Matrix Emulsion from its manufacturing unit located at Napara, Barabani, Burdwan to its sister unit at Dhanbad - HELD THAT - The appellant has duly filed reply to SCN on 16.10.2015 which is appearing at Page no. 249 of the Appeal Book. The Ld. Commissioner without taking into cognizance of the said Reply, has passed the impugned order wherein he has recorded that no Reply has been submitted till 29.09.2015. We find that since the impugned order has been passed after more than 3 months, the Ld. Commissioner was not justified in not considering the written reply submitted by the appellant. The duty demand has been raised on Matrix Emulsion (input) by considering the price at which output, Site Mixed Explosive, has been cleared from their Dhanbad unit, which is not permissible under Rule 4 of the Valuation Rules. However, the Ld. Commissioner, in his impugned order in para 3.8, while justifying the valuation adopted by him has clearly noted that both the goods which were cleared by the appellant to their sister unit as well as those cleared to independent buyers are the same - in the Reply filed the appellant, which has not been considered by the Ld. Commissioner while adjudicating the matter, has submitted the production process involved in the manufacture and delivery thereof to the independent buyers. The appellant has also submitted the license issued by concerned department under Explosives Act to justify their claim that goods in question, i.e., Matrix Emulsion is not an explosive and they are not entitled to sell such goods to any third party and hence do not have any market. it would be just and proper that matter is remanded back to the Ld. Commissioner who would examine the said facts and pass a reasoned order by considering all the contentions raised by the appellant as above as well as that may be further submitted duly supported with documents in the remand proceedings. Extended period of limitation - HELD THAT - There are no specific instance or allegation to show that the demanded duty amount has not been deliberately paid for reasons on account of fraud or suppression to justify the invocation of extended period of limitation - The Department was at its liberty to examine the aspect of correct valuation in normal course and having not done, the demand of differential duty cannot be raised by invoking extended period of limitation. Thus, the demand pertaining to extended period of limitation is set aside. Penalty - HELD THAT - Penalty as imposed in the impugned order is also set aside in entirety in absence of any element of fraud or suppression. In the remand proceedings, the Ld. Commissioner will decide the issue afresh, limited to the duty demand raised for the period covered within the normal limitation. Appeal allowed by way of remand.
Issues:
1. Central excise duty demand confirmation along with penalty and interest. 2. Valuation of goods under Rule 4 or Rule 8 of the Valuation Rules. 3. Consideration of written reply by the Ld. Commissioner. 4. Justification of duty demand on Matrix Emulsion. 5. Remand of the matter to Ld. Commissioner. 6. Invocation of extended period of limitation. 7. Imposition of penalty. Analysis: 1. The appeal was filed by M/s. Black Diamond Explosives Pvt. Ltd against the Order confirming central excise duty demand of ?4,68,84,408/-, penalty under Section 11AC, and interest for the period from January 2009 to November 2013. The demand was raised based on a Show Cause Notice invoking extended period of limitation. 2. The main issue revolved around the valuation of goods, specifically "Matrix Emulsion" cleared from one unit to another. The appellant valued the goods under Rule 8 of the Valuation Rules, while the department contended that Rule 4 should have been applied. The appellant argued that the goods were not comparable as they were used in the manufacture of a final product at a different unit. 3. The Ld. Commissioner failed to consider the written reply submitted by the appellant before passing the impugned order. The appellant raised objections based on the principles of natural justice, citing a decision of the Hon'ble Calcutta High Court. 4. The appellant argued that the duty demand on Matrix Emulsion was unjustified as it was an input for the final product, Site Mixed Explosives. They contended that the valuation based on the price of the final product cleared from a different unit was incorrect. 5. The Tribunal decided to remand the matter back to the Ld. Commissioner for a fresh examination of facts and a reasoned order considering all contentions raised by the appellant. 6. The Tribunal found that the invocation of the extended period of limitation was not justified as there was no evidence of deliberate non-payment of duty due to fraud or suppression. The demand related to the extended period was set aside, and penalty imposition was also revoked. 7. The appeal was allowed by way of remand, emphasizing adherence to the principles of natural justice in the proceedings before the Ld. Commissioner. This detailed analysis highlights the key legal arguments, procedural lapses, and the Tribunal's decision on each issue involved in the judgment.
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