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TMI Blog2011 (2) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... - E/476/09 - A/416/2011-WZB/C-II(EB) - Dated:- 3-6-2011 - Mr. M.v. Ravindran, Mr. P.R. Chandrasekharan, JJ. Appearance: Shri.Gajhendra Jain, Advocate for appellant Shri.W.L. Hangshing, Jt. CDR, for respondent Per: P.R. Chandrasekharan 1. This appeal is directed against the order-in-original No.02/CEX/09 dated 30/01/2009 passed by the Commissioner of Central Excise, Pune. 2. Briefly stated the facts are as follows:- 2.1 The appellants M/s.Mahindra Ugine Steel Co. Ltd., (MUSCO in short), Pune, are the manufacturers of motor vehicle parts and they undertake the said activity on job work basis, out of the raw materials supplied by M/s.Mahindra Mahindra Ltd. The scrap generated during the process of manufacture was detained by the appellants and the cost of scrap has been reduced from the assessable value of the motor vehicle parts. The department issued a show-cause notice to the appellants alleging that they have suppressed the facts of producing of scrap from the assessable value and has mis-declared the price of the finished goods manufactured by them and returned to M/s.Mahindra Mahindra Ltd. The said show-cause notice was adjudicated by the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rect the appellant to co-operate with the authorities as and when they are called for the personal hearing. Accordingly, all the appeals are allowed by way of remand to the original adjudicating authority". 2.3 The Commissioner afforded an opportunity to the appellants to make their submissions. The appellants submitted that they had filed detailed written submissions before the Hon'ble CESTAT, wherein it was mentioned that even after taking into account, the principles laid down by the Supreme Court in M/s. General Engineering's case and taking the cost as calculated by the Cost Auditor for each component, there was excess payment of duty. Therefore, the said Cost Auditor's report may be sent to the Cost Auditor for his comments or otherwise the said Cost Auditor may be made available for cross examination. 2.4 The submissions made by the appellants before the CESTAT were that the calculation of actual cost in the Cost Auditor's report for each component showed that even if the value of scrap is included there was no short payment of duty by them. The calculation in the cost audit report dated 25/11/2006 also showed that there is excess payment of duty as evidenced from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of his comments are given below:- "Material cost was calculated on the gross weight of the input raw material and not on the basis of weight of the final product. Realizable value of the scrap was deducted from the material cost calculated as per above. Since the scrap was sold at higher rate, the actual value of sale of scrap was added to the labour charges. This assessable value was compared with the assessable value provided by M M, in their purchase order and difference in the value considered for payment of excise duty and value so calculated by MUSCO was worked out. The differential rate then was applied to the quantity of final products cleared by MUSCO to M M after payment of applicable excise duty during the relevant period and differential assessable value was derived. B) Re-quantification as per letter F.No.LC/CIVIL-65/2006 dated 14/07/2003. Vide letter F.No.LC/CIVIL-65/2006 dated 14/07/2003, he had been directed to work out revised duty calculation by including the realizable value of scrap in the landed cost of raw material. Accordingly, he submitted calculations by including the realizable value of scrap in the landed cost of raw material.The inclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... just enrichment. 2.8 As regards the claim of the assessee that the demand is barred by limitation of time on the ground at the relevant time. There are a number of conflicting judgements with regards to the inclusion or otherwise of the value of scraps retained by them in the assessable value of the finished products manufactured and hence, they could not to be alleged with the charges of suppression of facts or willful mis-statement of facts with an intent to evade duty. With regards to this aspect, the Commissioner observed as follows:- "However, I find that the issue regarding the determination of the assessable value of the goods manufactured on job work basis has been the subject matter of the dispute in a number of cases and was finally resolved by the Supreme Court in the case of M/s.Ujagar Prints. The law also stood settled against the assesses, in view of the ratio of decision of the Supreme Court in respect of Jay Engineering Works Ltd. There can therefore not be a claim of a bonafide belief as the existing case laws for the relevant time were already against the assessee. The assessees have claimed that they were led by the decision of the Asstt. Collector for the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand for differential duty even in those cases where the components.....under the Modvat Rules. In their case, since whatever duty is paid by them is availed as Cenvat Credit by the buyer M M. The demand of differential duty on the basis of alleged suppression of facts cannot be upheld. They further argued that as per the principles laid down in Lawkim Ltd., Vs. CCE, Pune-II 2007 (218) ELT 142 (Tri-Mum) had opted for the procedure under Rule 4 (5) (a) of Cenvat Credit Rules, 2004, there would not have been any necessity to make payment of Cenvat Credit subsequently and the goods could have been moved without payment of duty in which eventuality the question of determination of assessable value and demand for differential duty would not have arisen and, therefore, applying the ratio of the judgement they are not liable to pay any differential duty. He further relied on the decision of the Tribunal in the case of P.R. Rolling Mills Pvt Ltd., Vs. CCE, 2010 (249) ELT 232 (T), which has been affirmed by the Hon'ble apex Court reported in 2010 (260) ELT A84 (SC). He further contend that the demand is beyond the normal period is not maintainable in their own case the Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants reliance on Tal Manufacturing cited (supra). On a perusal of said judgements, it is not clear under what circumstances and what facts of the case, the said adjustment was issued. The only thing, which is coming out from the perusal of the said judgement is that it related to re-opening of assessment by resorting to proviso to Rule 9 of Central Excise (Valuation) Rules, 2000 read with Rule 8 of the Valuation Rules, the appellant has not shows as that the facts of the said case are identical to the present one and, hence, we do not find how this judgement can be applied to the present case. The appellant has also relied on the judgement of the Hon'ble apex Court in the case of Jay Yuhshin Ltd., cited (supra) wherein the apex Court had set aside the demand of differential duty on the cost of the components not included in a job work transaction. 6. In our view, the said judgement does not coming in the application as in the instant case the Hon'ble apex Court had directed this Tribunal to go by the Cost Auditor's report with regard to the inclusion of the cost of the scrap in the assessable value of the finished goods supplied on job work basis. When such a specific d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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