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2005 (8) TMI 337 - CESTAT, MUMBAIValidity Of Show cause notice issued - Valuation (Central Excise) of Linear Alkyl Benzene (LAB) - Captively consumed goods - manufacture of detergent powder and detergent cake - demand duty - penalty and interest - non-consideration of relevant submissions made in defence by the notice - HELD THAT:- As the LAB recipient factories had paid much more duty in PLA than now being demanded by the show cause notice dated 25-2-2000. In such situations, there cannot be any intention to evade payment of duty, more so when it is considered to be a related person or same person sales by Revenue. Ingredients of proviso to Section 11A therefore can not be attracted. Hence demand beyond one year period of limitation is barred. The cost of production submitted to the department on 25-9-1998 showed operating cost of LAB as Rs. 33,990.95. It was specifically mentioned that the cost is operating cost and not cost of production. The break-up of cost of production was given headwise. None of expenditure included in this cost sheet is found to be incorrect by the show cause notice. In fact, they compare favourably with corresponding figures given in the show cause notice. A look at the cost sheet would have made it abundantly clear that interest expenditure, depreciation and profit margin were not included. The Range obviously noted the same but found nothing incorrect in it. If DGAE has different understanding of cost of production, that cannot be a ground for invoking proviso to Section 11A against the appellants. Thus, there appears to be a change in the basis of assessment by the department. Hence invoking larger period is incorrectly invoked a change of basis of assessment cannot be a reason to invoke the proviso to Section 11A(1). For the last two notices, the Commissioner has applied Rule 4 read with Rule 11 of the Valuation Rules, 2000. This stand is directly contrary to the stand taken for the earlier notices. Demands for the period November, 2000 to November, 2001 has been confirmed under Rule 4 read with Rule 11 of the Valuation Rules, 2000. It is submitted that even of the case of the department is assumed to be correct that KI is related person, still clearances of LAB to KI and other factories of the appellants is to be governed by Rule 8 and Rule 9 of the Valuation Rules, 2000. Rule 8 and Rule 9 are more specific provisions relating to valuation of LAB captively consumed, then Rule 4 read with Rule 11. It is settled law where specific provisions are made, general provisions are excluded. Besides, CBEC Circular dated 1-7-2002 makes it amply clear that clearances to KI and other factories should be done under Rule 8 i.e., 115% of cost of production. The impugned Order-in-Original which has failed to consider this legal position therefore the entire basis of the demand determined is unsustainable. The impugned Order-in-Original does not give any reasons as to why Rule 8 and Rule 9 as also CBEC circular dated 1-7-2002 are not applicable. In fact, the show cause notice dated 11-9-2001 by demanding differential duty under Rule 8 and Rule 9 has impliedly confirmed that Rule 8 read with Rule 9 alone is applicable for clearances of LAB to KI and other factories of the appellants. The impugned Order-in-Original has also confirmed demand of differential duty raised by show cause notice dated 11-9-2001. Revenue cannot be allowed shifting stands. Thus, the impugned demands vide Orders-in- Original is liable to be set aside in its entirety. Hence, no penalty and interest is called for and the same is to be set aside. The main Show Cause Notice, which is found to be barred by limitation and proceedings initiated thereunder and penalties and other liabilities arrived are to be set aside. Appeal of Directors and Executives allowed in full along with assessee's appeal in this case. Appeal disposed of accordingly.
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