CX - A sketchy and airy disposal of issue, less than diligent approach to adjudication is manifest in entire proceedings, observes CESTAT and remands matter
By TIOL News Service
MUMBAI, JAN 12, 2017: THIS is an appeal filed by the assessee against Order-in-Original dated 27th November 2006 passed by the CCE, Pune-I.
The dispute is the valuation of scrap cleared by the appellant to its own foundries at Maval and Chinchwad for use in manufacture of castings which are utilised by the appellant.
The Revenue view is that the value adopted for clearances of this scrap was not in conformity with the trend of prices at which scrap was being procured from market sources by the same foundries.
Resultantly, a demand for differential duty of Rs.64,57,407/- was issued for the period from January 2003 to December 2005.
The allegation in the notice inter alia is that the appellant had been clearing scrap at uniform rate of Rs.7,825/- per metric ton from April 2000 and it was only after this was questioned that the rates were revised upwards to Rs.9,310/- in May 2003 and thereafter steadily increased to Rs.17,300/- in March 2005 implying that appellant had not been complying with the Valuation Rules, 2000.
Before the CESTAT, the appellant relied upon the decision in PR Rolling Mills Pvt. Ltd. 2009-TIOL-2575-CESTAT-BANG to submit that the scrap could well have been cleared under rule 4(5)(a) of CCR without payment of duty; two earlier disputes of almost identical nature viz. Order no. 1823-1829/WZB/2006/C-III(EB) dated 7th September 2006 and Order no. 1722/WZB/2004/C-I dated 16 th November 2004 have been decided in their favour by the Tribunal to hold that such clearances are not dutiable. Also cited in support are the decisions in Nirlon Ltd. 2015-TIOL-96-SC-CX and of the Tribunal in Rallis (India) Ltd. 2016-TIOL-1699-CESTAT-MUM.
The AR urged the Tribunal not to accept the claim of revenue neutrality in view of the decisions in Star Industries 2015-TIOL-234-SC-CUS, Automotive Stampings and Assemblies Ltd 2015-TIOL-836-CESTAT-MUM, Mehta & Co. 2011-TIOL-17-SC-CX, Kitply Industries Ltd 2011-TIOL-46-SC-CX and Sharda Ispat Ltd 2012-TIOL-1183-CESTAT-MUM to show that allegation of deliberate intent to evade duty is sustainable since assessee is aware of differing prices.
The Bench inter alia made the following observations -
++ There is no allegation that the foundries market their castings to other customers. It is moot whether the Central Excise Act, 1944 mandates the re-determination of duty in such circumstances and, if no purpose is achieved by such exercise, whether such academic endeavours are required to be pursued. We must admit to being at a loss in comprehending the justification thereof.
++ Even if the statute does require such exercise to be undertaken, resort to rule 11 of Central Excise (Valuation of Price of Excisable Goods) Rules, 2000 for recovery of differential duty carries with it the responsibility of arriving at the assessable value by examination of each component that is included therein by Revenue. That is the bounden obligation of an adjudicating authority who is unable to carry out the task within the straitjacket that restrain the preceding rules.
Coming down heavily on the adjudicating authority, the Member (Technical) could not resisting making the following mention –
++ The impugned order contains not a sentence on the computation variance between that of appellant and that in the show cause notice. On the contrary, the confirmation of demand is founded on the alleged failure of noticee to defend the valuation adopted by them, the accolade heaped on the investigators for bringing the alleged evasion to light, the admission of noticee that rule 11 alone is applicable, a general reference to the geographical proximity of Mumbai to Pune which apparently marginalizes the transport cost, that the assessee was compelled to periodical revision of the assessable value only after alerts from the department and that the assessee had consistently been distancing itself from its responsibilities.
++ In an adjudication order spanning sixteen and half pages, about one page is devoted to that finding that differential duty arises while three and half pages discuss the plea of limitation. Even if the noticee failed to provide adequate rebuttal to the allegations in the notice, by no stretch does the residuary rule of valuation stand on its own as it lacks any defining parameter. In the absence of any finding on the manner and validity of computation proposed in the show cause notice, there is nothing that we can apply our mind to ascertain the legality and propriety of the impugned order. A less than diligent approach to adjudication is manifest in the entire proceedings before the original authority and adds no credit to the individual or the high office that he adorned.
To justify that the Bench was not over-reacting, paragraphs 32 to 36 of the impugned order passed by the CCE, Pune-I were extracted verbatim.
The CESTAT, thereafter, concluded –
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“13. In view of this sketchy and airy disposal of the issue for determination in the impugned order, we feel that the matter must be decided afresh. We, therefore, set aside the impugned order and remand the matter back to the original authority to determine and record reasons for arriving at an assessable value at variance with that adopted by appellant after analyzing the components of the costs that are deductible from the price at which market scrap is procured by the foundries.”
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The Appeal was allowed by way of remand.
(See 2017-TIOL-104-CESTAT-MUM)
