2009 (3) TMI 485 - AT - Central Excise

Valuation- The respondent is manufacturer of chemical compound falling under Chapter Heading No. 4005.00 and he cleared the same to their job worker, at Coimbatore for manufacture of further products. The further products, which were manufactured on a job work basis were supplied by the job worker to the mother unit, i.e. M/S. Elgitread (India) Ltd. Coimbatore, directly. From the mother unit, the said final products were further cleared for home consumption/export. It was noticed by the On scrutiny of the cost data, it revealed that the cost of compound was arrived at by the respondent by not including the customs duty, surcharge and Special Additional Duty which was paid by the Debit in their DEPB scrip. A show cause notice issued for short payment of duty. The show cause notice was adjudicated by the Adjudicating Authority and the demand was confirmed, along with interest and also imposed equivalent penalty under Section 11AC of the Central Excise Act, 1944. Commissioner (Appeals) came to the conclusion that the Order-in-Original as passed by the Adjudicating Authority, needs to be set aside and he set aside the. Held that- commissioner rightly followed the CBEC Circular and case law of M/s Essar Steels Ltd. Commissioner of Central Excise, Visakhapatnam, thus there is no wrong in the impugned order which simply follows the law, as has been laid down by the larger bench and series of the decisions of Tribunal.

Summary

Issues:
1. Whether the customs duty, surcharge, and Special Additional Duty paid by the respondent through their DEPB scrip should be added to the assessable value of the products cleared to the job worker.
2. Whether the demand is barred by limitation.
3. Whether the impugned order should be set aside.

Analysis:

*Issue 1:*
The appeal concerned the addition of customs duty, surcharge, and Special Additional Duty paid by the respondent through their DEPB scrip to the assessable value of products cleared to the job worker. The Revenue argued that irrespective of the payment method, these duty elements should be included in the valuation under Rule 8 of the Central Excise Valuation Rules 2000. However, the respondent contended that as the duties were debited in the DEPB book, they should not be added to the assessable value. The Tribunal noted that a Larger Bench decision had held that Notification No. 34/97-Cus. was an exemption notification, and duties adjusted through DEPB credit could not be considered as a cost for valuation purposes. The Tribunal upheld the Commissioner's findings and rejected the Revenue's appeal.

*Issue 2:*
The respondent argued that the entire demand was barred by limitation as the show cause notice was issued for a period discussed during a visit in 2002, and there was no allegation of willful misstatement or suppression of facts. The Tribunal, however, did not find merit in this argument and focused on the substantive issue of duty payment through DEPB credit.

*Issue 3:*
The Tribunal analyzed the Commissioner's decision, which followed the law as established by the Larger Bench and CBEC Circular. The Tribunal found no fault in the impugned order and upheld it, rejecting the Revenue's appeal. The decision was based on the interpretation of the exemption notification and the treatment of duties paid through DEPB credit in the valuation process.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the Commissioner's decision regarding the treatment of customs duty, surcharge, and Special Additional Duty paid through DEPB credit in the valuation of cleared products. The judgment emphasized adherence to established legal principles and interpretations set by the Larger Bench and relevant circulars.