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TMI Blog2002 (3) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... dopting the comparable prices of allegedly similar goods manufactured by M/s. SAIL, Vizag or M/s. Kirloskar Ferrous Industries Ltd., Bevinahalli with adjustments allegedly dependent upon the quality. 2. A notice was issued after conducting enquiries as it appeared - (i) KFIL were clearing the Pig iron in solid form to independent customers, either on their own account or on account of KSL, Ginigera during the period in question (3-8-98 to 25-1-2000). This fact was not disclosed to the department, till the investigation of valuation of Pig Iron (Liquid and Solid) was taken up and facts detected by the Department. (ii) KFIL were clearing the Pig iron in solid/liquid form in a manner not involving sale to ML, Ginigera/Kurla/Kalwae and KSL, Pune/Baramathi either on account of ML or on account of KSL Ginigera. The Pig iron in liquid form (hot metal) was cleared only to ML, Ginigera both on account of ML and on account of KSL Ginigera, in a manner not involving sale (conversion basis). (iii) The assessable value adopted by KFIL for payment of duty on clearances in a manner not involving sale was always less than the assessable value adopted for their own clearances to customers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (Valuation) Rules, 1975. As the aforesaid situation for the period from April 1999 onwards was not specifically covered by Rules 4 to 6 of the said Valuation Rules, it appeared that the value of such goods was required to be determined according to the best of the proper officer s judgment under Rule 7 of the said Rules and for this purpose, he may have regard, among other things, to any one or more of the methods provided in Rules 4 to 6 of the said Rules. Under Rule 6(b)(i), the assessable value could be based on the value of the comparable goods produced or manufactured by the assessee or by any other assessee. It appeared that the goods manufactured by KFIL themselves and cleared directly by them to the independent customers of M/s. KSL as aforementioned, were comparable goods as per the above provisions and the value of the said goods could be adopted for determination of the assessable value under Rule 7 read with Rule 6(b)(i) of the said Valuation Rules. (v) The assessable value adopted for payment of duty on clearances of Pig iron (both solid liquid) in a manner not involving sale (e.g. to ML Ginigera/Kurla/Kalwe and KSL, Pune) was never based on the normal price at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earances to the customers of KSL, Ginigera to whom the clearances were effected directly form KFIL on account of KSL, Ginigera until such clearances on account of KSL (Ginigera) were detected by the department during investigation. (x) The assessee did not file the declaration regarding marketing pattern, discount structure and such other particulars as required under Rule 173C(3A) of Central Excise Rules, 1944 until the investigation on valuation by the Department were under way. As apparent from the statement dated : 18-4-2000 of Shri P.V.S. Chandrasekharam, the said declaration was filed only on 27-11-99 after the Internal Audit Team visited and asked for the said declaration. (xi) The Pig iron in solid form which was produced during the initial period 6/98 and 7/98 out of the raw materials purchased by KFIL themselves and the solid Pig iron manufactured subsequently on conversion basis were all stored together as a single heap, and were sold to independent buyers as well as cleared to ML., Ginigera and other allied customers like ML, Kalwe; KSL, Pune, out of the same heap of solid Pig iron. This was apparent from the statement dated : 19-2-2000 of Shri P.V.S. Chandrasekhara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence with regard to the so-called comparable price of some other manufacturers as adopted by them for payment of duty on clearances of Pig Iron on conversion basis. It appeared that even Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975, speaks of basing assessable value first on the comparable goods produced or manufactured by the assessee himself and only thereafter it refers to the comparable goods manufactured by any other assessee. It also appeared that the assessee had not precisely demonstrated as to how with reference to exact input batch composition, actual properties of the goods manufactured and such other relevant factors the goods manufactured by other manufacturers were regarded by them as goods comparable to Pig Iron manufactured out of their own MBF. It also appeared that Section 4(1)(a) of Central Excise Act, 1944 uses the expression such goods , which means not only the goods under assessment, but also other goods of the same class. It appeared that the same goods manufactured by an assessee may be cleared at different times in different lots and different consignments and the goods of each lot or consignment will be such goods . Apparently, simila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er order recovery of interest from M/s. KFIL in relation to the aforesaid demand, in terms of Section 11AB of the Central Excise Act, 1944. In the above context, a reference is invited to the first and second proviso to Section 11AC as introduced vide Section 99 of Finance Act, 2000 whereunder the amount of penalty liable to be paid by the noticee shall be 25% of the duty determined provided other conditions laid down in such amended Section 11AC are fulfilled. (v) I impose a penalty of Rs. 5 lakhs each (Rupees five lakhs only) separately on Shri Vijay Sharma, Chief Executive Officer, Shri G.R. Warty, Vice President (Finance), Shri PVS Chandrasekharam, DGM (Finance) and Shri L. Bhaskar, Executive (Finance) of M/s. KFIL, Ginigera under Rule 209A of the Central Excise Rules, 1944. The present appeals are against this order. 4. We have heard both sides and considered the matter and find - (a) Learned SDR for Revenue while supporting the order has contended - The appellant manufactured pig iron for Mukand Ltd. and Kalyani Steel out of raw material supplied by them, and was paid conversion charges. The appellant adopted an assessable value claimed to be comparable marke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., the value of such goods sold by the assessee for delivery at any other time should be applied in this case before going to the cost construction method under Rule 8. The same principle was enunciated by this Bench in the case of Polyhydron Pvt. Ltd., reported in 2001 (132) E.L.T. 410, which held that value should be determined by going through the Valuation Rules seriatum. In view of this factual and legal position the order of the Commissioner has correctly held that pig iron manufactured on job work basis should be assessed to duty on the value of such goods cleared for sale from the factory of the manufacturer. (b) The learned Advocate on the other hand while stressing on the time bar aspect relied on the Constitution Bench decision of Ujagar Prints [1988 (38) E.L.T. 535 (S.C.)] clarificatory order in Ujagar Prints case [1989 (39) E.L.T. 493 (S.C.)] and the Catena of case law from Kandivali Metals [l997 (90) E.L.T. 187 (T)] to Banswara Syntex Ltd. [1999 (34) RLT 7 CEGAT] and under Final Order Nos. 50 51/2002, Bangalore CEGAT in the case of Loharu Steel Industries Ltd. [2002 (141) E.L.T. 229 (T)] wherein the Tribunal has held that the valuation in case of such job wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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