9911796707
TMI Blog2007 (2) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... 99/ Adj / 1060, dated 29-5-2000 May'95 to Jun.'98 Rs. 5,80,80,162 06 IV (72) 6-20/96/P/1665 dated, 5-3-1999 July'98 to Nov.'98 Rs. 1,28,03,804 07 IV (72) 6-20/96/P/4947 dated, 25-6-1999 Dec.'98 to Mar.'99 Rs. 96,35,164 08 IV (72) 6-20/99/P/8297 dated, 17-11-1999 April'99 to Aug.'99 Rs. 1,20,49,933 09 IV (72) 6-20/96/P/2476 dated, 25-4-2000 Sep.'99 to Dec.'99 Rs. 90,09,461 10 IV (72) 6-20/96/P/1074 dated, 5-3-2001 Jan.'2000 to Mar.'2000 Rs. 78,07,918 11 V(Ch 72) 15-128/R-II/Bhi-I/Sec-11A dated, 31-5-2001 Apr.'2000 to May'2000 Rs. 74,47,066 12 V(Ch 72) 15-93/R-III/Bhi-I/Sec-11A/2000Adj., dated, 31-5-2001 June'2000 to Aug.'2000 Rs. 97,66,031 TOTAL. . . Rs. 14,49,85,555 2. The first five of the aforesaid SCNs were issued by Commissioner, Central Excise, Raipur and the remaining were issued by Dy./Asst. Commissioner, Central Excise, Division-I, Bhilai. 3. The brief facts are that the applicant is a manufacturer of Iron and Steel in their Bhilai Steel Plant by smelting iron ore in blast furnace. From blast furnace, the molten iron is tapped and taken in ladles to steel melting shops for further processing of iron and steel to manufacture ingots, billets, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department's view of invoking Rule 6(b)(i) because the said Rule applied where the excisable goods were not sold by the assessee but were use consumed by him or on his behalf in production or manufacture of other-articles. In the present case, the goods were neither consumed by the applicant nor were used in production of manufacture of other articles on behalf of the applicant. Accordingly, the Tribunal set aside Order-in-Original and remanded back the case to Commissioner for re-determination of the assessable value of the scrap in dispute under Rule 7 of the Valuation Rules and re-adjudicate the matter only with reference to the value and consequential amount of duty liable to be paid by the applicant and also to re-determine the penalty on the applicant. The applicant has filed this settlement application during the pendency of the remanded proceedings before the Commissioner. The case came to be admitted vide Admission Order No. A 481/C.E./06-SC (PB), dated 12-7-2006. 4. The case came up for final hearing on 13-2-2007 when the applicant was represented by Shri V. Lakshmi Kumaran, Advocate and the Revenue was represented by Shri N. Veeriah, Deputy Commissioner, Central Excise, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y different product arising form the breaking of ladles which are no longer usable. Therefore the letter category of Skull Scrap has far lesser impurities and fetches a better price. The applicant was paying duty on the cleared from the Slag Heap based upon the tendertedly, there was a cost of segregation involved which was borne by the buyer which was not being included in the assessable value. The applicant in the present proceedings admits inclusion of the cost of this segregation in the value of the finished product and on that basis admits a duty amount of Rs. 2,57,90,137/- for the period March, 1994 to August, 2000. The said amount also stands deposited on 10-8-2006. After the segregation of the transportable sizes of boulders from the huge heaps of slag in the dumping yard, the goods are cleared by the tenderer from the factory gate of the applicant to their own premises where other operations like further breaking of the boulders and recovery of metal are done by the tenderers as required, with which the applicants had no concern. Any prices at which the items resulting from the processes undertaken by the tenderer in his own premises are sold, would have no relevance to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessable value of the scrap in dispute under Rule 7 of Valuation Rules and adjudicate the matter only with reference to the value and consequential amount of duty liable to be paid by the party and also to re-determine the penalty on the party. 8.2 The ld. Advocate clarified that it is necessary to read down Rule 7, as re-produced below :- "If the value of excisable goods cannot be determined under the foregoing rules, the proper officers shall determine the value of such goods according to the best of his judgment, and for this purpose he may have regard among other things, to any one or more of the methods provided for in the foregoing rules." Thus, once Rule 7 is to be applied, the entire valuation has been thrown wide open by CESTAT enabling application of the principles contained in Section 4 of the Act and the Valuation Rules read together. In the present case, it is a fact that two costs are clearly ascertainable which should form part of the assessable value, namely, tender price for sale of the goods in question made at arms length to non-related persons and the cost of segregation of slag which is borne by the buyer. The former, in any case, was being taken as the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same goods at an ultimate price of Rs. 5750 PMT which has inclusive of all taxes, which after allowing 10% profit margin at two stag works out to Rs. 4982.40 PMT. At the same time, M/s. Bhilai Steel Plant have cleared the C.I. Skull Scrap of ladle breaking yard at an assessable value of Rs. 4100 PMT and cum duty price duty of Rs. 4510 PMT. Thus, there is a difference of Rs. 472 in the two prices which have after adjusting the freight and local taxes would not be set of and the market price of the scrap of slag dump yard sold to AMR Associates would still be a little higher than the price of scrap of ladle breaking yard sold by M/s. Bhilai Steel Plant: The relevant Show Cause Notice for the said period has adopted the price of Rs. 4100 PMT as fixed by them for sale of scrap of ladle breaking yard, for computation of duty on the goods under consideration viz, the scrap of slag dump yard, it is submitted that this method is just and reasonable, and is in accordance with the principles laid down under the said Valuation Rules. It is clear, therefore, that the said values of the 'CI Skull Scrap' as mown in the Show Cause Notices, under the circumstances of this case, represent the corre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases must, take cautious cognizance of events and developments subsequent to the institution of the proceeding provided the rules of fairness to both sides are scrupulously obeyed." 10.2 The said decision relies on a similar ratio laid down by the Apex Court in Dilip Kumar Sharma & Others v. State of Madhya Pradesh - (1976) 1 Supreme Court cases. 10.3 Therefore, Revenue cannot blow hot and cold. 11. The Bench has gone through the case records and heard both sides. The basic issue involved here is one of Central Excise valuation and the question for consideration is a to whether valuation of Slag cleared from Slag Heaps should be - (a) based upon the tender sale price + segregation cost as argued by the applicant; or (b) equivalent to the price at which so called "comparable goods", namely, Skull Scrap arising from breaking of unusable ladles was sold as per the Revenue's submission. 12. While answering the above issue for consideration, certain basic valuation principles have to be borne in mind :- (a) Goods have to be assessed at the value at which they are sold at the factory gate; (b) The sale should be in the course of a normal transaction where parties are not related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parate independent tenders to independent parties are also invited for the two products establishing the fact that they are separate products and not comparable. This Revenue has not refuted. It is also brought on record that post-August, 2000 to date, Revenue has been assessing the value of the Slag in question not on the basis of the value of Skull Scrap but on the basis of the value arrived at by taking into consideration the tender price + the cost of segregation. Thus, for a period of 6½ years. Revenue has accepted this valuation principle and has not raised any demands; but for some strange reason it is not willing to extend this for the period of demand under dispute namely March, 1994 to August 2000 for reasons best known to it as nothing whatsoever has been brought on record to establish to the contrary. Thus, if Revenue truly felt obliged to arrive at the value of the goods in question by comparing it to the value of Skull Scrap, it should continue to do so for post-200 which it has not done. The applicant cannot be put to disadvantageous position on account of this divergent stand of Revenue which is without reason. The Revenue, on a query form the Bench, has confirmed t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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