2023 (9) TMI 918 - AT - Central Excise

Refund of amount deposited during the course of investigation - The issue of levy of Excise Duty is pending for adjudication - purified/ graded Hydrogen gas supplied by M/s. Vadilal Gases Limited to M/s. Vadilal Chemicals Limited prior to 01.03.2008 - Valuation of Central Excise Duty - related party transaction or not - value of clearances of hydrogen gas effected/ sold by M/s. Vadilal Chemicals Limited directly to their customers or from their depots should be taken for the purpose of calculation of Central Excise duty or not. Dutiability of the purified/ graded Hydrogen gas prior to April 2008 - HELD THAT - The matter has been decided by Hon ble Supreme Court in the appellant s own case COMMISSIONER OF CENTRAL EXCISE, VADODARA VERSUS M/S VADILAL GASES LTD. ORS. 2017 (1) TMI 1311 - SUPREME COURT where it was held that the Tribunal has rightly observed that if no treatment was given to the gas purchased by the appellant, the customers of the appellant would not have been purchasing helium from the appellant at a price 40% to 60% above the price at which the appellant was purchasing. The issue regarding determining whether the related party transaction exist in this case or not, as per Section 4(1) (b) of Central Excise Act, 1944 read with Rule 9 of Central Excise (Valuation) Rules, 2000 is concerned, since the matter has already been remanded back to the original adjudicating authority by impugned order-in-appeal dated 31.03.2015, the Adjudicating Authority while deciding related party issue should also re-adjudicate the matter of dutiability of the purified/ graded Hydrogen gas as per the Hon ble Supreme Court decision in the appellant s own case COMMISSIONER OF CENTRAL EXCISE, VADODARA VERSUS M/S VADILAL GASES LTD. ORS. 2017 (1) TMI 1311 - SUPREME COURT . Since the matter has already been remanded back by the Commissioner (Appeals) to the original adjudicating authority and forgoing paras, the entire issue needs to be decided afresh by the lower authorities. The issue with regard to refund should also be clubbed with the main issue and need to be decided by the competent Adjudicating Authority. In view of above, this matter is also remanded back to the Additional Commissioner for taking up the issue pertaining to refund amount deposited during the course of investigation while deciding the main show cause notice. Appeal allowed by way of remand.

Summary

Issues Involved:

1. Dutiability of purified/graded Hydrogen gas prior to 01.03.2008.
2. Related party transaction under Section 4 of the Central Excise Act, 1944.
3. Penalty and interest under Central Excise Rules and Act.
4. Refund claim for the amount deposited during investigation.

Summary:

1. Dutiability of purified/graded Hydrogen gas prior to 01.03.2008:
The Tribunal examined whether the process of purification, grading, and labeling of commercial hydrogen gas by M/s. Vadilal Gases Limited amounts to 'manufacture' under Central Excise law. The Supreme Court in the appellant's own case (2017 (346) ELT 161 (SC)) held that such activities did not result in the creation of a new marketable commodity. The Tribunal, relying on this precedent, concluded that no Central Excise duty is liable on the purified/graded Hydrogen gas supplied by M/s. Vadilal Gases Limited to M/s. Vadilal Chemicals Limited prior to 01.03.2008.

2. Related party transaction under Section 4 of the Central Excise Act, 1944:
The Tribunal addressed whether transactions between M/s. Vadilal Gases Limited and M/s. Vadilal Chemicals Limited constituted related party transactions. The Commissioner (Appeals) had remanded the matter for verification of the related party transaction and valuation under Rule 9 of Central Excise (Valuation) Rules, 2000. The Tribunal upheld this remand for further examination by the Adjudicating Authority.

3. Penalty and interest under Central Excise Rules and Act:
The Adjudicating Authority had imposed penalties under Rule 25 and 26 of the Central Excise Rules, 2002, and confirmed the recovery of Central Excise duty along with interest under Section 11AB. The Tribunal, considering the Supreme Court's decision, remanded the matter back to the Adjudicating Authority to reassess the penalties and interest in light of the new findings.

4. Refund claim for the amount deposited during investigation:
M/s. Vadilal Chemicals Limited sought a refund of Rs. 15 Lakh deposited during the investigation. The Commissioner (Appeals) had previously remanded this issue for reconsideration. The Tribunal directed that the refund claim should be adjudicated afresh along with the main issues by the competent Adjudicating Authority.

Conclusion:
The Tribunal remanded the appeals filed by the appellants back to the Adjudicating Authority for fresh decision on all issues raised in the show cause notices. The department's appeal against the remand order of the Commissioner (Appeals) was dismissed, affirming the Commissioner (Appeals)' authority to remand matters for fresh adjudication as per the Supreme Court decision in MIL India Limited (2007 (210) ELT 188 (SC)). The appeals were thus decided in the manner outlined above.