TMI Blog2023 (6) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the appellant to its sister units was not the wet chips. This fact has also been certified by the Chartered Engineer in its report dated 10.05.2012 that the chips arising after the centrifugal stage in which these are cleared by the appellants has a moisture content of 9-13%. The report of the Chartered Engineer has not been contradicted in the impugned order. It is found that the impugned order has mechanically been passed and the demand has been confirmed for these years 2009-10 2010-11 without any discussion in the impugned order to the CAS-4 certificates for these years and only CAS-4 certificates for the years 2007-08 and 2008-09 have been discussed in the impugned order. Therefore, there was absolutely no reason for the adjudicating authority to confirm demand for the year 2009-10 2010-11. For the years 2007-08 2008-09 we find that the CAS-4 certificates originally prepared by the Cost Accountant did not have any mention whether the cost of production arrived at was for the dry chips or the wet chips. However, the appellant in order to justify their contention that the cost of production determined in the CAS-4 certificates for these years was only for the dry c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Central Excise Tariff Act, 1985. Polyester chips and nylon chips manufactured by the appellant are used for manufacture of polyester yarns and nylon yarns at its manufacturing unit and from time to time, also clears such polyester and nylon chips to its sister concern units situated at Pune and Mahad and to independent buyers. It is claimed by the appellant that the nylon chips are hygroscopic in nature, i.e., they absorb moisture from the atmosphere and these chips are cleared in wet form immediately after it passes through the centrifugal machine, i.e. containing around 10% moisture content. In respect of nylon chips captively consumed for manufacture of nylon yarns at its manufacturing unit at Rajashree Nagar and nylon chips cleared to its sister units, the appellant discharges excise duty on the value determined under Section 4(1)(b) of Central Excise Act, 1944 read with Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 and CBEC Circular No. 354/81/2000-TRU dated 30-06-2000 and No. 692/8/2003-CX dated 13-02-2003. In terms of Rule 8 of the Valuation Rules, in case the excisable goods are not sold by the assessee but are used for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontent, the CAS-4 certificates for the years 2007-08 2008-09 did not show any such discount. The appellant in order to prove that the per unit cost determined in the CAS-4 for the year 2007-08 2008-09 were actually for the dry chips from which they have not claimed a discount of 9.5% while clearing to their sister units. They also produced another certificate dated 23.04.2012from the Cost Accountant obtained subsequently which certified that the cost shown in the CAS-4 certificates for 2007-08 2008-09 was in respect of dry chips and certifying that the moisture content in the wet chips cleared from the factory was 9.32% and 9.4 % respectively of the gross weight of wet chips. The Ld. Adjudicating authority however did not get convinced with the submissions made by the appellant and confirmed the demand of Rs. 92,28,179/- against the appellant under extended period of limitation imposing equal penalty under Section 11AC of the Act and also demanding applicable interest as per Section 11AA/11AB of the Act holding that the appellant had failed to clear the excisable goods in terms of the CAS-4 certificates. The relevant extract from the adjudication order is as under: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es upto which the goods are ready for dispatch. Therefore, the assessee s contention that deduction of 9.5% towards the moisture content has to be made is unacceptable since there is a standard practice in their company to send only wet chips, which has already been accounted for by the cost accountant. Further, the assessee could not show or demonstrate that CAS-4 certificates also include drying process. It is an admitted position that the CAS-4 certificates do not indicate as to whether the same is for wet or dry chips. I therefore observe that CAS-4 certificates has to be adopted to arrive at the value of captive consumption. Hon ble courts have in catena of judgments have held that the CAS-4 certificates have to be followed unless a patent inaccuracy or error is shown. 2.3 Ld. Counsel for the appellant has vehemently pleaded before us that the deduction of 9.5% was correctly claimed from CAS-4 cost of production which were for the dry Nylon polyester chips to arrive at the per unit cost of production of the wet chips. He has claimed that the impugned order fails to take into account the evidences submitted by the Appellant in reply to Show Cause Notice i.e. a Certificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended period of five years limitation duty should not had been paid, short-levied or short paid or erroneously refunded because of either any fraud, collusion or willful mis-statement or suppression of facts or contravention of any provision of the Act or Rules made thereunder. These ingredients postulate a positive act, therefore, failure to pay duty or take out a license is not necessarily due to fraud or collusion or willful mis-statement or suppression of facts or contravention of any provisions of the Act. Revenue having not discharged its burden, Invocation of extended period of limitation is unwarranted in the present case. that clearances made to sister concerns were duly reported in the relevant ER-I returns and there was no suppression as there is no column in the ER-I returns where deduction on account of moisture content could have been reported;that there was no incentive for it to deliberately suppress the value of clearances made to sister units since whatever central excise duty was paid was available to its sister units as Cenvat credit, therefore, the situation is revenue neutral. He relied on the decision of the Tribunal in the case Of Mahindra and Mahindra Ltd V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese years was only for the dry chips, produced another certificate from the Cost Accountant for the years 2007-08 2008-09 which categorically mentioned that the cost shown in the earlier CAS-4 certificates was for the dry chips only and the average moisture content in the wet chips was 9.32% and 9.40 percent respectively for the years 2007-08 2008-09. The certificate issued by KAILASH SANKLECHA ASSOCIATES, COST ACCOUTANTS read as under :- This is to certify that we have checked cost records, excise records, production records and other related records of M/s Rajashree Polyfil (A unit of Century Enka Limited) having its plant at Rajashree Nagar, Post Umalla Dist. - Bharuch for the financial year 2007-08 (1st April, 2007 to 31st March, 2008) to verify cost as given in the attached CAS-4 and moisture contents in the wet chips a previous step output in the manufacturing process to produce dry chips. We certify that the cost shown in the attached CAS-4 represents cost of dry chips and average moisture content in the wet chips from which the dry chips are produced, was 9.32% of gross weight of wet chips during the financial year 2007-08. The cost figures given in the att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We also concur with the view expressed by the learned Commissioner (appeals) that if the adjudicating Authority is not able to arrive at conclusion based upon the Cost Accountant s Certificate, he could have ordered the inspection of the records, by resorting the provisions in the CEA 1944. Having not done so, plainly inferring that the Cost Accountant s certificate is not backed with corroborative evidences is not sufficient reason for rejecting the refund claim. On perusal of the cost Accountant s certificate, we find that the Cost Accountant has clearly indicated in his certificate that he had gone through all the accounts/records of the Company and then only, he has come to the conclusion that the amount of refund claim by the respondents has not been passed on to the customers at any stage, against this certificate. There is no contrary evidence adduced by revenue. Accordingly in view of the above reasoning we find that the order of learned Commissioner (Appeals), is legal and correct. It does not require any interference. The appeal filed by the revenue is rejected. 6. Therefore, we hold that the original Cost Accountant CAS-4 certificates determined cost of the dry chips ..... X X X X Extracts X X X X X X X X Extracts X X X X
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