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2018 (9) TMI 1572 - AT - Central ExciseValuation - goods in the Malkapur unit of the appellant - Inclusion of certain costs - principles of natural justice - appellant argues that they have been denied the principles of natural justice in not being provided with the copy of report of Director (cost) - Scope of SCN - new grounds raised in SCN - Held that:- It is a well established principle that the day the show cause notice was issued, the clock stops and only the allegations made in the show cause notice and only the documents which were relied upon in the show cause notice can be considered for subsequent adjudication proceedings. It is not open for the department to add additional documents which, in this case the learned Commissioner has correctly not done - As far as the report by M/s SSZ is concerned, it was also not relied upon document but it was used as defence by the appellant before the adjudicating authority and for the reasons recorded therein, he did not agree with the same. Revenue neutrality - Held that:- The demand is on duty short paid or not paid which is a consolidated exercise. In this case, since the department has opted to rely on the cost audit report of DPA, they should do so fully recalculating the duty payable on all clearances during the period. The figures submitted by the learned counsel would show that such a calculation would eliminate the demand because they have paid in excess of what would have been payable - the demand in respect of their Malkapur unit does not survive as far as the question of under-valuation is concerned. The demands in respect of the Jeedimetla and Balanagar units follow from the demand in Malkapur unit and hence will not survive either. CENVAT credit on rejected material - Held that:- There is nothing on record to show that the material had not entered the factory of manufacturer or have not been taken into production process. This being a part of quality control of manufacture of final products, they are entitled to the credit on the rejected inputs. Appeal allowed - decided in favor of appellant.
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