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TMI Blog2013 (11) TMI 1415X X X X Extracts X X X X X X X X Extracts X X X X ..... ods - These are cases of clearances for evasion of duty - thus valuation under Rule 8 will not apply and the value of comparable goods is correctly applied. Demand of duty on removals for replenishments of short-shipments - clandestine Removal - Held that:- The question whether short shipments and subsequent replacement to make good the short shipment was genuine or not is a question of fact rather than law -The second consignments sent on the pretext of goods short shipped were clandestinely removed - Excise liability does not depend on realisation of money but on manufacture and removal - the appellant has been freely removing goods under the pretext of testing to be done, replacement of defective pieces etc. without payment of duty and proper accounting of the goods after testing etc. – thus in the case of short shipment also this is only a method adopted for clandestine removal and not cases of genuine supplies to make good short shipments. Extended period of limitation – Held that:- Following Commissioner of Central Excise, Mumbai Versus M/s. Kalvert Foods India Pvt. Ltd. & Ors. [2011 (8) TMI 24 - SUPREME COURT OF INDIA] - The argument of the first appellant that SCN was issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 11AC of the Act. Further penalties of Rs.2,00,000/- each have been imposed on Shri. A. S. Narayanachar and Shri. Chakrathar Gandhi under Rule 26 of Central Excise rules 1944. The appellant company had paid Rs. 1,78,67,340/- towards duty liability and Rs.10,68,267/- towards interest liability before the issue of Show Cause Notice. These amounts are appropriated against the demand in the adjudication order. Aggrieved by the adjudication order the appellants have filed this appeal before the Tribunal. 3. Removal excisable goods are held to be proved under three categories of clearances as follows: (i) Goods cleared under challans showing purposes such as Field Replacement/ Advance Field Replacement/ Rework and Demo to their field offices and customers, involving short payment of duty amounting to Rs. 91,45,837/-; (ii) Goods cleared for the purported purpose of testing involving short payment of duty amounting to Rs.1,94,92,177/-; (iii) Goods cleared in the guise of consignments for making good goods short shipped under various invoices involving short payment of duty amounting to Rs.40,70,280/-. 4. The appellants are challenging the order on following grounds: (i) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectricity no sale to third party was involved) (v) BSNL Vs. CCE 2007 (215) ELT 229 (This is an order at stay stage. Telephone exchanges were installed out of duty paid materials. The prima facie finding was that such telephone exchanges were not marketable) 7. He argued that the goods were cleared for research and development at Bangalore facility and for replacement for which no consideration was received and hence it is appropriate that Rule 8 of Valuation Rule is applied. He contests that each transaction has to be separately valued. 8. In respect of duty on removals for making good short shipments, the Ld. Advocate submits as follows: (i) The department relied on the delivery challans for alleging removal of goods but other facts recorded in the delivery challans were ignored; that the goods had been cleared only for replenishments of short shipments, cannot be ignored, and the reliance on delivery challans cannot be made on piecemeal basis. (ii) No extra price was charged for the removals for replenishment of short supplies, as those supplies were made against the original purchase orders / related invoices on which duty had been fully discharged. (iii) The department h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or consumption by him or on his behalf in the production or manufacture of other articles, the value shall be one hundred and ten per cent of the cost of production or manufacture of such goods. 11. He submits that the appellant was not using the goods in further manufacture of other articles either in the factory of manufacture or in their R& D laboratory at Bangalore. So this rule would not apply. He further submits that the case laws quoted by the appellant is applicable to a situation where the goods manufactured in the other unit is cleared on payment of appropriate duty on transaction value whereas is in this case the goods either disappeared at other offices or it were used for replacing defective parts. He argues that under Central Excise laws when goods are cleared for replacement of a defective part in an equipment earlier cleared on payment of duty, excise duty is payable on the part going for replacement because excise duty is on manufacture and payable on clearance. Even when goods are supplied free of cost excise duty is payable. 12. He further submits that mostly the evidence is to the effect that the appellant cleared goods on the pretext of (i) Testing, (ii) Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods cleared to other units of the appellant for further manufacture of other excisable goods. These are cases of clearances for evasion of duty. In such circumstances valuation under Rule 8 will not apply and the value of comparable goods is correctly applied. The detailed work sheet annexed to Show Cause Notice shows that value for each clearance has been worked out separately for each transaction based on available data. During adjudication proceedings the appellant has not given any data to correct errors if any therein. So we do not see any merit in the argument of the first appellant in this matter. 19. One of the arguments of the appellant is that the parts in question which were sent out without payment of duty were suitable for use only by the customer to whom it was sent. Hence it has to be considered as not marketable. This is not a correct argument. For goods to be marketable it is not necessary that goods in question should be generally available in the market. Marketability does not depend upon the number of purchasers. This is the finding of the Hon Apex court in A.P. State Electricity Board Vs. CCE-1994 (70) E.L.T. 3 (S.C.). Huge machineries as also small parts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in the appellants factory. On such carbon dioxide demand was issued for SCN dated 28-2-1984 and for the period April, 1982 to September, 1982 the department had raised demands under two different SCNs. Again demand was issued on 16-7-1987 for the period assessment years 1982-83 to 1986-87 alleging that the appellant was supplying carbon dioxide to another unit as per agreement dated 19-3-1983; that they had not taken necessary licence; had not followed the procedure prescribed under the rules; and had not discharged duty liability. The ruling is to the effect that after a notice is issued invoking extended period on an issue for a particular period for short levy of subsequent period extended period cannot be invoked since the relevant facts were known to the department. The decision also is not to the effect that extended period of time will not be available for conducting investigation and issue of Show Cause Notice in any matter where suppression is involved. This cannot interpreted to mean that an assessee against whom SCN is issued for clandestine removal invoking extended period the assessee is immune from invocation of extended period for all future clandestine removals. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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