Commissioner Of Central Excise vs Kishor Pumps P. Ltd

(Arising out Order-in-Appeal No. 45-R/2005 dated 01.03.2005 passed by the Commissioner of Central Excise, Pune III)

For approval and signature: Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S. S. Garg, Member (Judicial)

1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? : No 2. Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? : Yes 3. Whether Their Lordships wish to see the fair copy of the Order? : Seen 4. Whether Order is to be circulated to the Departmental authorities? : Yes

Commissioner of Central Excise, Appellant

Vs.

Kishor Pumps P. Ltd. Respondent

Appearance:

Shri V.K. Shastri, AC (AR) for the appellant Shri A.G. Kulkarni, CA with Sagar Kulkarni, Advocate for the respondent

CORAM:

Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S. S. Garg, Member (Judicial)

Date of hearing : 27.08.2015 Date of decision : 27.08.2015

O R D E R No:..

Per: P.K. Jain:

The brief facts of the case are that that the respondent assessee is engaged in the manufacture of castings. Some of these castings they used for their own factory at other location in the manufacture of pumps. The remaining ones they sale to independent buyers. The dispute is relating to the value of the castings which they cleared and used for their own factory in other location. The period involved is 1996 to 1999. The respondent assessee was filing the requisite price declaration supported by the Chartered Accountant certificate for the price of captively consumed castings. On the basis of such price declaration, goods were being cleared on payment of duty. Later on, department asked for the detail working on the basis of which the Chartered Accountant was issuing the certificate, which the appellant was not able to produce. Based upon the details available in the balance sheet, Revenue issued a show-cause notice demanding duty of `21,51,773/- invoking the extended period of limitation, interest and penalty under Section 11AC. The case was adjudicated by the Commissioner who vide the impugned order dropped the demand. Revenue is in appeal against the said order of the Commissioner.

2. Ld. AR submitted that the respondent assessee was not able to produce the costing details based upon which Chartered Accountant has issued a certificate. Further, ld. AR took us through the grounds of appeal filed by the revenue. He submitted that the Commissioner has dropped the demand mainly on the consideration that the similar casting were sold by the respondent assessee to independent buyers at a price which was lower than the price they were paying duty on captive consumption and therefore then Rule 6(b) of the Central Excise (Valuation) Rules, there is no scope for demanding further duty. It was submitted that the casting by very nature are different and it cannot be said that the casting being sold to the independent buyer were the same as those captively consumed. Further, it was submitted that the Order in Original does not indicate the dates for which such invoices pertain and whether the period of such invoices is same as that those cleared for captive consumption.

3. We have gone through the impugned order. In the impugned order, Commissioner has observed has under :-

9.6. In the present case, it is seen from the records of the case that M/s. Kishor Pumps were supplying the goods in question to other independent buyers also in addition to supplies effected to their own units. During the time of personal hearing M/s. Kishor Pumps submitted copies of invoices relating to supplies effected by them to other independent buyers and stated that the price declared by them for the goods in question used for captive consumption was always higher than the price at which such goods were sold by them to other independent buyers. From the aforesaid evidence furnished by M/s. Kishor Pumps, it is seen that the price declared by them for the goods in question used for captive consumption was always higher than the price at which such goods were sold by them to independent buyers. When value of comparable goods manufactured by the assessee and sold to independent buyers is available, the determination of assessable value of the goods in question should be under rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975. In such cases, there is no scope to travel further to rule 6(b)(ii). The question of determining the value on cost construction method by taking the cost of manufacture of the goods profit, etc. arises only on such cases where rule 6(b)(i) value is not available. There is also no evidence or reason to suspect the bonafides of the transactions between M/s. Kishor Pumps and other independent buyers or to suspect the price charged in such transactions. The show-cause notice also does not contain any other evidence to prove a case of under valuation of the goods in question. In the above circumstances, I do not find any justification to invoke the provisions of rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975 for re-determination of the assessable value of the goods in question through cost construction method.

4. The only grounds of appeal are that the relevant invoices have been produced by the respondent assessee for the first time during adjudication and it is not clear whether the invoices pertain to the same period or not. Another contention raised is that castings are part specific and the price may vary from component to component. While we agree that the prices may vary from component to component but by very nature of casting the price will not vary so much. In any case, the grounds of appeal it is presumed without any supporting evidence that the casting which were sold to independent buyers were different from the castings captively consumed. Similarly, it is only the apprehension that the date of invoices for independent buyers is different from the date of invoice for captive consumption. Even if these dates are different the prices of casting will not vary on day to day basis but would be fairly stable. Revenue has not produced any evidence that the dates of the invoice produced before the Commissioner were so much different from the date of captive consumed goods that the prices are necessarily different. In the absence of these details, we do not find any merits in the contention of the appeal filed by the revenue and we agree with the finding of the Commissioner extracted above. Even on limitation, we find respondent has a very strong case.

5. We do not find any merits in the appeal filed by the Revenue. Appeal is therefore dismissed.

(Operative part pronounced in Court)

(S. S. Garg) (P.K. Jain) Member (Judicial) Member (Technical)

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