TMI Blog2020 (1) TMI 755X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise Act, 1944 for the existing of two transaction values, Although for the same product and for the same receiver. It is not the case of the department that the price paid or payable by M/s. JSW to the Appellants has been suppressed and differential amounts were being paid by M/s. JSW to the Appellants. In the absence of any such evidence the department contention that the sale value adopted by the Appellants do not represent the actual transaction value is not sustainable. The agreement between the appellant and the customer clearly brings out the difference in pricing. The higher price adopted was only in respect of the clearance of Nitrogen is made out of Liquid Nitrogen purchased by the Appellants. Just because there is a variation in one of two consignment the value cannot be adopted to the entire consignment in the particularly in the era of assessment based on transaction value. The department has not put forth any evidence to demonstrate that amounts over and above the transaction value were collected by the Appellants. On going through the SCN and the adjudication order, it is found that the same have not taken into account the fact that appellants hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r cubic meter and therefore the appellants have undervalued the nitrogen gas sold to JSW and as such transaction value is liable to be rejected and the actual value requires to be re-determined under residuary rule i.e. Rule 11 of the Valuation Rules, 2000. Show Cause Notice dated 21.4.2011, covering the Period April 2006 to August 2010, seeking recovery of excise duty of ₹ 1,20,22,633, was issued to the appellants. Commissioner of Central Excise, vide impugned order dated 21.7.2011, confirmed the demand along with equal penalty under section 11AC of CE, act, 1944. 3. Learned counsel for the appellants submits that the appellants have manufactured and cleared the final products to their customers for a price; therefore, the assessable value of the final product is to be determined in terms of Section 4(1) (a) of the Central Excise Act, 1944 for payment of excise duty on the basis of transaction value; appellants have cleared nitrogen gas at the rate of 1.90 per cubic meter and in case of power failure at the rate of ₹ 14.19 per cubic meter i.e. price agreed between the appellants and JSW and have paid excise duty on the correct transaction value; when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vely consumed by JSW in the manufacture of final product and therefore, no duty is required to be paid by the appellants in terms of Notification No.67/95-CE dated 16.3.1995. Moreover, entire exercise of demanding differential duty from the appellants in respect of nitrogen gas cleared to sister units in the present case is revenue neutral as the recipient units are taking credit of duty paid by the appellants and also recipient units are paying duty in respect of the finished goods cleared by them. Hon ble Supreme Court in the following decisions held that when demand raised for differential duty is clearly revenue neutral exercise then such demand is not sustainable; Hence, the demand of interest is liable to be set aside. (i) CCE C (Appeals) Ahmedabad Vs Narayan Polyplast 2005 (179) ELT 20 (SC) (ii) CCE C Vadodara Vs Narmada Chemtur Pharmaceuticals Ltd. 2005 (179) ELT 276 (SC) (iii) CCE Vs. Textile Corporation 2008 (231) ELT 195 (SC) (iv) CCE Vs. Jamshedpur Beverages 2007 (214) ELT 321 (SC) (v) CCE Vs. Coca Cola India (Pvt.) Ltd. 2007 (213) ELT 490 (SC) (vi) SRF Ltd Vs CCE 2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, no penalty is imposable on the appellants. 8. Learned AR, appearing for the Revenue, reiterates the findings of the OIO and submits that the appellant are a startup unit in the premises of M/s. JSW Ltd (JSWL) which was consuming the whole N2 as per agreement made by them with IAPL for onsite supply of gases and this agreement was valid for 12 years; as per agreement the Appellant is taking water, electricity, and Structure/building facility free of charge for supply of N2 gas to M/s. JSW Ltd; Appellant procured the gas from M/s. Essar Steel Ltd (ESL) and other units located at Patal Ganga, Pen, and Raigarh District; Appellant procured the N2 gas from ESL at the rate ranging from ₹ 7/- to 10/- per M3 unit of sale; in the event of failure of electricity and contingencies charged electricity bill as well as diesel charges to the assessee and in such a situation IAPL charged JSWL@ 9.25 per M3 on payment of central excise duty; so there exits commercial relationship in which IAPL and JSWL where IAPL is clearing the N2 Gas to JSWL at the rate ₹ 7/- to 10/- per M3 which is not a commercially feasible. 9. Learned AR further submits that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogen Gas from the freely available air, whereas in the other they are manufacturing from Liquid Nitrogen purchased by them and preserved at a constant temperature. The second process of manufacture of Nitrogen is sparingly used only in case of electricity failure in the factory. The agreement entered into by the appellant with M/s. JSW provides for differential pricing of the goods i.e. ₹ 1.90 when drawn from air and ₹ 14.19 for cubic meter when processed from Liquid Nitrogen. The department contends that the appellants have procured liquid Nitrogen Gas at the rate of ₹ 7 to ₹ 10 per cubic meter and sold the same to M/s. JSW at the rate of ₹ 1.90 per cubic meter and thus the appellants have under valued the nitrogen gas sold to M/s. JSW. Department seeks to arrive at the value of the nitrogen supplied by the Appellants to M/s. JSW in terms of Rule 11 of the valuation Rule 2000 and arrived at the value of ₹ 7.83 per cubic meter calculating the same at the base value of liquid nitrogen purchased by the Appellants. 12. The Appellants contend that they are paying excise duty on transaction value depending on the source of nitrogen sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case law submitted by Learned A.R. is not on the facts of the case and hence we find that the same is not applicable. 13. During the course of the argument, the appellants also submitted that wherever certain elements like electricity and water are supplied to the Appellants by M/s. JSW, are taken into consideration and the value has been arrived at following Rule 6 of the Central Excise Valuation Rules 2000 and therefore, it is not correct to invoke Rule 11 of the Valuation Rules. On going through the Show Cause Notice and the adjudication order, we find that the same have not taken into account the fact that appellants have arrived at the value in terms of Rule 6 of Central Excise Valuation Rules 2000. It has also not been brought on record as to why the calculation arrived at by the appellants has not been discussed and disposed off before calculating in a different manner. Under the circumstances we find that the matter requires to travel back to the Adjudicating Authority to arrive at the correct assessable value, considering the observations of the bench as above and the submissions of the appellants. 14. In the result the appeal filed by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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