LexCOMMISSIONER OF CENTRAL EXCISE, NAGPUR versus M/S. BALLARPUR INDUSTRIES LTD.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
A
COMMISSIONER OF CENTRAL EXCISE, NAGPUR
v.
MIS. BALLARPUR INDUSTRJES LTD.
AUGUST 30, 2007
B
[S.H. KAPADIA AND B. SUDERSHANREDDY,JJ.I
Central Excise Act, 1944; s.4/Cent~al Excise Rules, 1944; rr. 7, 57A
and 57CC/Central Excise Tariff Act, 1985; Chapters 47 and 48/Central
Excise (Valuation) Rules, 1975; r. 6(b) and Circular No.B-4211196---TRU
C dated 27.9.1996 issued by CBEC:
Evasion of excise duty-Assessee. manufacturing pulp and paper-No
excise duty chargeable-Availing of MODVAT credit on pulp-Assessee
transferring part of stock of pulp as inputs to its sister units for captive
D consumption in manufacturing of paper-Payment of duty @ 8% of cost price
instead of sale price by the assessee-Show-cause Notices-Revenue raising
demand of differential amount of duty computing excise duty @ 8% on. sale
price chargeable on reversal of MODVAT credit-Challenge to-Tribunal
held that there was no sale of pulp by the assessee-On appeal, Held: Show
cause notice constitute foundation in cases of alleged evasion of the excise
E duty-Rule 57CC applies where manufacturer engaged in manufacturing of
the goods exempted from payment of duty and credit on the inputs used in
manufacturing of such goods was taken by the assessee-Assessee required
to pay a presumptive amount equal to sale price of the exempted final
product-It brings into applicability of Section 4 of the Act and Valuation
-t
F Rules framed thereunder-Tribunal erred in holding that R.57CC not
applicable as it involves stock transfer and not a sale-Hence, matter remitted
to Revenue to decide the question of applicability of Rules 6(b)(i) and
6{b)(ii) of the Valuation Rules in accordance with law.
Show-cause Notices-Invoking of extended period of limitation-Held:
G Revenue not entitled to invoke extended period of limitation in respect of first
show-cause Notice which was time-barred-However, second and third show-
cause Notices remitted to Revenue to decide about applicability of r.6(b) and
(ii)-Since r. 7 of the Rules not mentioned in show-cause Notices, it is not
open to Revenue to invoke the said rule.
H
650
I
f--
COMMROFCENlRALEXCISEv. BALI.ARPURINDUS.LlD.
651
Words and Phrases:
'Normal price'-Meaning of in the context of Section 4(1) of the Central
Excise Act, 1944.
'Presumptive sum' and 'deemed price' -Meaning of in the context of
A
Rule 57CC of the Central Excise Rules, 1944.
B
The issue which arose for determination in this appeal was that in the
absence of sale of the goods manufactured by the assessee, part of which was
being transferred to its sister unit for captive consumption in manufacturing
the final product, which is exempted from payment of excise duty, MODY AT
credit on input was availed by the assessee, however on reversal of. credit, C
duty was paid on the cost price instead of the sale price. Under the
circumstances, whether rule 57CC of the Central Excise Rules, 1944 would
have any application or not, is the question.
Partly aUowing the appeal, the Court
D
HELD:l.1. Value is the function of price. In every case in which there
is an allegation of evasion, a show cause notice constitutes the foundation on
which the demand made by the Revenue could stand or fall Rule 57CC of the
Central Excise Rules deals with adjustment of credit on inputs used in the
manufacture of exempted final products. It applies in cases where a E
manufacturer is engaged in the manufacture of any final product which is
chargeable to duty as well as any other final product which is exempted from
payment of duty or chargeable to nil rate of duty and the manufacturer takes
credit of the specified duty on any inputs, which is used in manufacture of
both the above categories of final products. In such a case, the manufacturer
is required to pay a presumptive amount equal to eight per cent of the price F
of the exempted final product charged by the manufacturer for the sale of
such goods at the time of their clearance from the factory.
[Para 8) (656-A, B, q
1.2. The object of the rule 57CC(l) was to recover a presumptive sum
upon removal of exempted goods from a manufacturer who also manufactured G
dutiable goods, but using common input for both dutiable as well as duty
-i..
exempted goods and who took MOD VAT credit on such common inputs. Rule
57CC sought, therefore, to recover a presumptive sum equal to eight per cent
of the price of exempted goods at the time of their removal where the
manufacturer did not uExcerpt shown. Read the full judgment & AI analysis in Lexace.