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TMI Blog2020 (1) TMI 755X X X X Extracts X X X X X X X X Extracts X X X X ..... as supply to JSW, the appellants keep a stock of liquid nitrogen purchased and maintained in the vacuum insulated storage tank at a temperature of - 196 deg C (which is its boiling point). 2. The agreement provides for different pricing of Nitrogen emanating from different streams i.e. Rs. 1.90 per cubic meter in case of conversion from air and Rs. 14.19 per cubic meter in case of conversion from liquid nitrogen. During the period April 2006 to August 2010, the quantum of different streams of nitrogen, supplied to M/s JSW, was 2,06,98,792 (99.56%) and 91,906 (0.44%) cubic meters respectively. As per department, the appellants have procured liquid nitrogen gas @Rs. 7 to Rs. 10 per cubic meter and sold the same at Rs. 1.90 per cubic meter and therefore the appellants have undervalued the nitrogen gas sold to JSW and as such transaction value is liable to be rejected and the actual value requires to be re-determined under residuary rule i.e. Rule 11 of the Valuation Rules, 2000. Show Cause Notice dated 21.4.2011, covering the Period April 2006 to August 2010, seeking recovery of excise duty of Rs. 1,20,22,633, was issued to the appellants. Commissioner of Central Excise, vide impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 1978 (2) ELT (J172) (SC), the order is bad in Law; further, the department has not determined the assessable value in accordance with the best judgement assessment; department assumes cost which was never ever incurred; there is no place for nationality in Section 4 valuation & much so in best judgement assessment. 5. Learned counsel for the appellants also submits that Appellants have already discharged excise duty, of Rs. 39,15,033, in respect of water and electricity supplied free of cost by JSW and therefore the appellants have complied with Rule 6 of the Valuation Rules. Alternatively, appellants submit that entire nitrogen gas supplied by the appellants is captively consumed by JSW in the manufacture of final product and therefore, no duty is required to be paid by the appellants in terms of Notification No.67/95-CE dated 16.3.1995. Moreover, entire exercise of demanding differential duty from the appellants in respect of nitrogen gas cleared to sister units in the present case is revenue neutral as the recipient units are taking credit of duty paid by the appellants and also recipient units are paying duty in respect of the finished goods cleared by them. Hon'ble Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be invoked; Hon'ble Supreme Court in the case of CCE Vs. Nirlon Limited - 2015 (320) ELT 22 (SC) held that extended period of limitation cannot be in case of revenue neutral situation; all the material facts relating to the nature of goods and valuation practices adopted by the appellants were known to the department; records were always available for scrutiny to the department; appellants have not contravened any provisions of the Rules; issue involved is an interpretation of the permission of the law. Therefore, no penalty is imposable on the appellants. 8. Learned AR, appearing for the Revenue, reiterates the findings of the OIO and submits that the appellant are a startup unit in the premises of M/s. JSW Ltd (JSWL) which was consuming the whole N2 as per agreement made by them with IAPL for onsite supply of gases and this agreement was valid for 12 years; as per agreement the Appellant is taking water, electricity, and Structure/building facility free of charge for supply of N2 gas to M/s. JSW Ltd; Appellant procured the gas from M/s. Essar Steel Ltd (ESL) and other units located at Patal Ganga, Pen, and Raigarh District; Appellant procured the N2 gas from ESL at the rate ran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both sides and perused the records of the case. Brief issue involved in the case is to decide whether the appellants are required to discharge Central Excise duty on the Nitrogen Gas manufactured and cleared by them to M/s. JSW. The appellants submit that they are manufacturing the said Nitrogen Gas under two different streams. In one stream they are just separating the Nitrogen Gas from the freely available air, whereas in the other they are manufacturing from Liquid Nitrogen purchased by them and preserved at a constant temperature. The second process of manufacture of Nitrogen is sparingly used only in case of electricity failure in the factory. The agreement entered into by the appellant with M/s. JSW provides for differential pricing of the goods i.e. Rs. 1.90 when drawn from air and Rs. 14.19 for cubic meter when processed from Liquid Nitrogen. The department contends that the appellants have procured liquid Nitrogen Gas at the rate of Rs. 7 to Rs. 10 per cubic meter and sold the same to M/s. JSW at the rate of Rs. 1.90 per cubic meter and thus the appellants have under valued the nitrogen gas sold to M/s. JSW. Department seeks to arrive at the value of the nitrogen supplied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two consignment the value cannot be adopted to the entire consignment in the particularly in the era of assessment based on transaction value. As stated earlier the department has not put forth any evidence to demonstrate that amounts over and above the transaction value were collected by the Appellants. For this reason we find that the case law submitted by Learned A.R. is not on the facts of the case and hence we find that the same is not applicable. 13. During the course of the argument, the appellants also submitted that wherever certain elements like electricity and water are supplied to the Appellants by M/s. JSW, are taken into consideration and the value has been arrived at following Rule 6 of the Central Excise Valuation Rules 2000 and therefore, it is not correct to invoke Rule 11 of the Valuation Rules. On going through the Show Cause Notice and the adjudication order, we find that the same have not taken into account the fact that appellants have arrived at the value in terms of Rule 6 of Central Excise Valuation Rules 2000. It has also not been brought on record as to why the calculation arrived at by the appellants has not been discussed and disposed off before calc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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