2013 (10) TMI 398 - AT - Central Excise

Valuation under Rule 8 of the of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 Detergents and Sulphonic acid supplied to sister concern Held that - Cost of production as certified in the Chartered Accountant certificate dated 7-9-2002 i.e. Rs. 52,000/- per M.T. for Surf Excel, the detergent powder and Rs. 62,000/- per M.T. for sulphonic acid should have been adopted, while according to the appellant this costing had been wrongly done on the insistence of the department by including the head office expenses and marketing and distribution expenses which are not required to be included in the costing in terms of CAS-4 Costing certificate are not in the CAS-4 format and accordingly it cannot be said as to whether the costing had been done in terms of CAS-4 costing standard or not - Matter has to be remanded for de novo adjudication after determining the cost of production of both the products during each financial year during the period of dispute strictly in terms of CAS-4 standard and in that format by a Cost Accountant appointed by the department and in the light of the Cost Accountant s certificate regarding the cost of production of the products, in question, during each financial year, the matter must be re-adjudicated. Limitation - Appellant submitted the Chartered Accountant certificate for the period from 1-7-2000 to December 2002 only on 27-3-2003 and that while after 1-7-2000 on the introduction of new Valuation Rules, the appellant were supposed to submit costing certificate from 1-7-2000 immediately, they in spite of repeated requests made by the Range Officer submitted the same only on 27-3-2003 claiming a much lower cost of production, than that certified in the certificate dated 7-9-2002 Held that - Commissioner s order is silent on the appellant s claim that they had informed the department from time to time during the period of dispute regarding the assessable value of sulphonic acid done Surf Excel bulk detergent along with the Chartered Accountant s certificate, for correct determination of the question of limitation and the linked question of imposition of penalty under Section 11AC, the matter remanded for de novo adjudication - Impugned order is set aside and the matter is remanded to the Commissioner for de novo adjudication.

Summary

Issues:
Determination of cost of production under Rule 8 of Valuation Rules, 2000; Allegation of short payment of duty; Time limitation for duty recovery; Imposition of penalty under Section 11AC.

Analysis:

1. Determination of Cost of Production: The appellant, a unit of a company manufacturing detergent products, faced a dispute regarding the cost of production for detergent powder and sulphonic acid cleared for captive consumption by their sister concerns. The department alleged that the appellant had not correctly declared the cost of production, leading to short payment of duty. The appellant argued that the costing was done as per CAS-4 standard, excluding certain expenses not required under CAS-4. The Tribunal noted discrepancies in the Chartered Accountant certificates and remanded the case for reevaluation of cost of production strictly in CAS-4 format by a Cost Accountant.

2. Short Payment of Duty: The department issued a show cause notice for the alleged short payment of duty amounting to Rs. 6,00,52,995 during the period from July 2000 to December 2002. The Commissioner upheld the duty demand and penalty under Section 11AB. However, the Tribunal found discrepancies in the determination of the cost of production and remanded the case for re-adjudication based on correct costing standards.

3. Time Limitation for Duty Recovery: The appellant claimed that they had regularly submitted price lists and Chartered Accountant certificates to the department during the dispute period, arguing that the longer limitation period under proviso to Section 11A(1) should not apply. The Commissioner alleged suppression of relevant information by the appellant, leading to the invocation of the longer limitation period. The Tribunal remanded the case for a fresh adjudication to determine if the longer limitation period applies and if penalty under Section 11AC is justified.

4. Imposition of Penalty under Section 11AC: The Commissioner imposed a penalty under Section 11AC based on the alleged suppression of information by the appellant. The Tribunal directed a reevaluation of the penalty imposition based on the correct determination of the limitation period and the applicability of the Larger Bench judgment in a similar case.

In conclusion, the Tribunal set aside the impugned order and remanded the case to the Commissioner for a fresh adjudication considering the observations and directions provided in the judgment.