Cce-Jaipur-I vs Khetrinagar (Rajasthan)

[Arising out of order-in-appeal no. 31(MPM)CE/JPR-I/2006 dated 20.01.2006 passed by CCE-Jaipur]

1. Whether Press Reporter may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of the order?

4. Whether order is to be circulated to the Department Authorities?

CCE-Jaipur-I Appellant

Vs.

M/s. Hindustan Copper Ltd.

Khetrinagar (Rajasthan) Respondent

Appearance: Shri R.K. Gupta, DR for the appellant

None for the respondent.

Coram: Honble Shri Rakesh Kumar, Member (Technical)

Honble Mrs. Sulekha Beevi C.S., Member (Judicial)

Final Order No. 51979/2015

Per: Rakesh Kumar

1. The respondents are manufacturers of copper from copper ore. In course of manufacture of refined copper ingots by electrolytic process, a residue at Anode called Anode Slime emerges which is rich in precious metals mainly silver. Anode Slime during the period of dispute, i.e., during period from April, 2003 to June, 2003, was being cleared by the respondent to their refining unit in Jharkhand where the Anode Slime was being further processed for the extraction of silver. Since the Anode Slime is a by-product and its cost of production could not be determined on the basis of CAS-IV standard, Rule 8 of the Central Excise Valuation Rules, 2000 could not be invoked. The assessing officer, therefore determined the value of Anode Slime cleared to Jharkhand Unit under Rule 11 of the Valuation Rules by best judgment method and accordingly the value of Anode Slime was determined on the basis of the value of its silver content. However, the respondent while determining the value of Anode Slime in this manner, also deducted the element of duty on silver. The Department, however, was of the view that since during the period of dispute, the silver was fully exempted from duty, such abatement of duty which was exempt and as such was not payable, was not allowed. It is on this basis that after issue of show cause notice dated 20/5/2005, the Jurisdictional Assistant Commissioner vide order-in-original dated 30/09/2005 confirmed the duty demand of Rs. 94,930/- against the respondent along with interest. However, no penalty was imposed under section 11 AC. On appeal being filed to Commissioner (appeals) against this order, the Commissioner (appeals) vide order-in-appeal dated 20/01/2006 set aside the Assistant Commissioners Order and allowed the appeal. The Commissioner (appeals) set aside the Assistant Commissioners order on the ground of Revenue neutrality inasmuch as whatever duty was paid by the respondent unit located in Rajasthan, its CENVAT Credit would be admissible to the Respondents Jharkhand Unit.

2. Against this order of the Commissioner (appeals), this appeal was filed by the Revenue.

3. The main ground in the appeal is that since the value of Anode Slime had been determined on the value of its silver content and since during the period of dispute, there was no duty on silver, while determining the value of silver content, its excise duty element could not be abated. Accordingly, in the appeal filed by the Revenue, a prayer has been made for setting aside the order-in-appeal passed by the Commissioner (appeals)

4. None appeared for the respondent though notice had been issued to them well in time. In view of this, in accordance with the Rule 21 of the procedure Rules so far as respondents are concerned, the matter is being decided ex-parte.

5. Shri Ranjan Khanna, the ld. DR assailed the impugned order by reiterating the grounds of appeal in the Revenues appeal and pleaded that when during the period of dispute, the excise duty on silver was fully exempted, while determining the value of silver content in Anode Slime the excise duty was not required to be abated. He also pleaded that the setting aside of the duty demand by the Commissioner (appeals) on the ground of Revenues neutrality is also not correct. He also pleaded that since in the present case, the dispute is about the value of a by-product and since the cost of production of by-product cannot be determined on the basis of CAS-IV standard, Rule 9 read with Rule 8 of the Central Excise Valuation Rules, 2003 would not be applicable, the value of Anode Slime has been correctly determined under Rule by best judgment method. He, therefore, pleaded that the impugned order is not correct.

6. We have considered the submissions from both the sides and perused the records.

7. In this case the duty demand for the period from April, 2003 to June, 2003 had been raised by show cause notice dated 20/5/2005. However, we find that in the order-in-original passed by the Assistant Commissioner, he has given clear finding that he does not find any evidence of wilful mis-statement, fraud or collusion, suppression of facts on the part of the assessee which resulted in short payment of duty and for this reason, while confirming he duty demand, he has not imposed any penalty under section 11AC. Since the duty demand is for the period beyond the normal limitation period of one year, it would be sustainable only if the proviso to section 11A(1) could be invoked which can be invoked only if non-payment or short payment of duty is on account of fraud, wilful mis-statement, collusion, suppression of facts or contravention of any provisions of the Central Excise Act, 1944 or of the rules made therein with intent to evade the payment of duty on the part of the assessee. In exactly the identical situations, the penal provisions of section 11AC are attracted. When with regard to the penal provisions of section 11AC, the Assistant Commissioner has given a finding that he does not find any evidence of wilful mis-statement, fraud or collusion on the part of the assessee etc. and for this reason, he has not imposed any penalty on the assessee under section 11AC, he cannot confirm the demand beyond the normal limitation period by invoking proviso to section 11AC. Therefore, without going into the merits of the case, we are of the view that duty demand is time barred and hence, the order of the Commissioner (appeals) setting aside the demand cannot be found fault with. In view of this, we do not find any merit in the Revenues appeal. The same is dismissed.

(Rakesh Kumar)

Member (Technical)

(Sulekha Beevi C.S.)

Member (Judicial)

Ritu

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