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2016 (6) TMI 513 - CESTAT MUMBAI

2016 (6) TMI 513 - CESTAT MUMBAI - TMI - Recovery of duty on assessable value and imposition of penalty - proposed adoption of the price declaration in the delivery note as the value of the grey fabrics - demand on grounds not imposed in the SCN - Held that:- in view of the decisions of Hon'ble Supreme Court in the case of Commissioner of Central Excise, Nagpur Versus M/s Ballarpur Industries Ltd [2007 (8) TMI 10 - SUPREME COURT OF INDIA], in the case of Saci Allied Products Ltd. Versus Commissi .....

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dvocate For the Respondent : Shri V.K. Agarwal, Addl. Commissioner (AR) ORDER Per: Raju The appellants, M/s Sharda Synthetics Ltd., were processing grey fabrics received from M/s Karnataka Handloom Development Corporation Ltd. (KHDCL). The appellants were receiving fabrics from M/s KHDCL, and processing and returning the same to M/s KHDCL. The assessment was being done on the lines prescribed by the Hon'ble Supreme Court in the case of Ujagar Prints Ltd., i.e. on the basis of price of grey f .....

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a show-cause notice was issued to the appellant seeking to recover duty on the assessable value based on the price declared on the delivery challan by the appellants. The notice also compared the assessable value of a similarly placed manufacturer, namely, M/s Bangalore Textile and found to be higher than those of the appellant though both were receiving the grey fabrics from M/s KHDCL. The said notice for demand of duty was confirmed against the appellant and equivalent penalty was imposed. Pe .....

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er, which reads as under: - 55. The show-cause notice alleges that since delivery notes were accompanying each consignment they become delivery challans and therefore, the price of raw material (grey) declared in the said delivery notes should be taken as price of grey fabrics for arriving at assessable value. The show-cause notice seeks to determine the assessable value for shirting and suiting on the basis of the charges mentioned in delivery notes. As can be seen from the facts Narrated a .....

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nsideration is the landed cost of grey fabrics. Now whether this component of transit risk has to be included for determining the landed cost of grey fabrics? I find that this transit risk is recoverable by KHDCL only if the fabrics supplied by KHDCL are lost or damaged etc. in all cases where no loss or damage is cause, this cannot be included. Also the show-cause notice has not brought any evidence on record to show that in all cases, irrespective of loss or damage, KHDCL is recovering this tr .....

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find that in the case of supplies by M/s KHDCL, the cost of grey price in the hands of M/s SSL, KHDCL has made price declaration for excise purpose. I find that in this declaration the price of processed fabrics has been given. This has been arrived at after adding the cost of grey fabrics, processing charges and adding 10% mark-up charges to this aggregate. The price furnished for excise purpose has been worked out by the costing department of M/s KHDCL, by taking in to consideration inciden .....

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ner (Appeals) has gone on to confirm the demand by adopting grounds which were never invoked in the show-cause notice. He relied on the decision of the Hon'ble Supreme Court in the case of Sun Pharmaceuticals - 2015 (326) ELT 3 (SC) to assert that the Commissioner cannot go beyond the grounds raised in the show-cause notice. He also relied on decision of the Hon'ble Supreme Court in the case of Saci Allied Products Ltd. - 2005 (183) ELT 225 (SC) and Ballarpur Industries Ltd. - 2007 (215) .....

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rges, the Commissioner has gone on to confirm the demand on grounds not invoked in the show-cause notice. We find that the decision of the Hon'ble Supreme Court in the case of Ballarpur Industries Ltd. (supra), Saci Allied (supra) and Sun Pharmaceuticals (supra) clearly indicated that it is not permitted to go beyond the grounds raised in the show-cause notice. In case of Ballarpur Industries (supra), the Hon'ble Supreme Court has observed as under: - 21. Before concluding, we may mentio .....

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there is no invocation of Rule 7 of the Valuation Rules 1975 in the show cause notice, it would not be open to the Commissioner to invoke the said rule. In the case of Saci Allied Products Ltd. (supra), the Hon'ble Supreme Court has observed as under: - 33. In the case of Commissioner of Central Excise, Calcutta-II v. TISCO Ltd., 2004 (174) E.L.T. 307 (S.C.) (S.N. Variava & Dr. A.R. Lakshmanan, JJ.), it was held that in order to attract the first proviso to Section 4(1)(a) of the Act, t .....

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