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2003 (8) TMI 124 - AT - Central ExciseCenvat/Modvat - Demand - Determination of assessable value - Penalty and Interest - HELD THAT - We are reinforced in coming to such a finding that there was no sale price available since the Commissioner in the impugned order itself is determining the valuation of the removals effected to Indian Railways under Rule 6(b)(i) of the Central Excise (Valuation) Rules for the purposes of determining liability under erstwhile Rule 57CC and Rule 57AD. Rule 6(b)(i) of the Central Excise (Valuation) Rules is applicable if the value of the excisable goods under assessment cannot be determined under Rule 4 or 5. Rules 4 and 5 of these Rules prescribe valuation to be based on the value of such goods sold by the assessee for delivery at any other time nearest to the time of removal or when price was not the sole consideration for such sale effected. In the present case when it is found that no sales are being effected we cannot determine valuation under 6(b)(i) without ruling out Rule 4 and 5. Thus the valuations as directed by the Commissioner cannot be upheld. Once the sale value as arrived at and directed cannot upheld the sale price cannot be determined once sale price cannot be determined 8% of the amount as required cannot be determined under Rule 57CC. Since Rule 57CC prescribes reversal of an amount and not of Modvat credit availed or of duty; no machinery provision exist under the Rules for the reversal of the amounts required under Rule 57CC the reversal as ordered under Rule 57-I or Sec. 11A cannot be upheld. Since Rule 57-I provides for reversal of credit and recovery of credit wrongly availed and Sec. 11A restricts itself to recovery of duty. Tribunal in the two decisions which are being relied upon has held that the amounts mentioned in Rule 57CC is not in the nature of a duty. Therefore the recoveries as ordered cannot be upheld. Relying on Pushpaman Forgings 2001 (10) TMI 223 - CEGAT MUMBAI wherein the Tribunal held that in the absence of machinery provision in the Act or the Rules for the recovery of an amount under 57CC the present order of recovery of an amount under 57CC cannot be upheld. We also rely upon the case of Gas Authority of India Ltd. to come to our conclusion that recoveries under Rule 57CC of Central Excise Rules 1944 is not in the nature of duty and therefore Rule 57-I (ibid) cannot be invoked to recover any short payment relying upon Board Circular No. B-42/1/96/TRU dated 27-9-96 which has clarified that Board also holds that deposits made under Rule 57CC was not in the nature of duty and therefore cannot be taken as Modvat credit would induce us to confirm that there is no substance to support the present order and the same is required to be set aside. As regards the mandatory penalty imposed equivalent to duty evaded under Rule 57-I(iv)/57AH(ii) read with Sec. 11AC of Central Excise Act 1944 it is found that the same cannot be upheld for recovery of an amount since the Rules and Sections relied upon by the adjudicator to impose the 100% mandatory penalty cover only input credit and duty and not an amount under Rule 57CC . The penalty under Rule 173Q of Central Excise Rules 1944 also cannot be upheld since Rule 173Q(i)(bb) is applicable only to taking of credit or duty or money in respect of inputs capital goods and it is not applicable to an amount which is required under Rule 57CC to be reversed. Since interest under Rule 57-I(v)/57AH(i) of Central Excise Rules 1944 read with Sec. 11AB of Central Excise Act 1944 is required to be imposed only in case of duty and credit and the present recoveries not being in the nature of duties and credit the interest as ordered cannot be upheld. Thus the order is set aside and appeals allowed with consequential relief as per law.
Issues involved: Determination of assessable value, recovery of differential duty, imposition of penalties, and charging of interest under Central Excise Act, 1944.
Assessable value determination: The appellant, a production unit under the Ministry of Railways, was set up to manufacture goods for supply to Indian Railways and private parties. The appellant availed Modvat facility for supplies to private parties, while goods supplied to Indian Railways were exempted from duty. The audit revealed defects, leading to a Show Cause Notice questioning the assessable value determination for goods supplied to Indian Railways. The Commissioner re-determined the assessable value, leading to differential duty demands and penalties. Recovery of differential duty: The Commissioner confirmed demands for differential duty based on under-valuation allegations. However, the Tribunal found that Rule 57CC prescribed reversal of 'an amount,' not Modvat credit or duty. As there was no machinery provision for such reversal, the Tribunal held that the recoveries ordered under Rule 57-I or Sec. 11A could not be upheld. Imposition of penalties: The Commissioner imposed penalties equivalent to the evaded duty under Rule 57-I(iv) read with Sec. 11AC, which the Tribunal found could not be upheld as the rules and sections relied upon covered only input credit and duty, not 'an amount' under Rule 57CC. Similarly, penalties under Rule 173Q were deemed inapplicable to the reversal of 'an amount' under Rule 57CC. Charging of interest: The Tribunal determined that interest under Rule 57-I(v) read with Sec. 11AB could only be imposed in case of duty and credit, not for 'an amount' as required under Rule 57CC. Therefore, the interest as ordered by the Commissioner was deemed unsustainable. In conclusion, the Tribunal set aside the Commissioner's order, allowing the appeals with consequential relief as per law.
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