The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the levy of Excise Duty on excisable goods manufactured or produced in India at rates outlined in the Schedules to the Central Excise Tariff Act, 1985 as per section 3 of the Central Excise Act,1944.
Nalwa Steels and Power Ltd, the appellant assessee was a manufacturer of TMT bars of various grades and it sold them to independent buyers as well as to two of its inter-connected undertakings of Jindal Steel Power Ltd and Jindal Power Limited.
The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the demand of Rs. 1,97,57,985/- as differential central excise duty from the assessee for the period 2011-12 to April 2015, and the amount, Rs. 1,96,92,460/- was confirmed for the period 2011-12 up to November 2013 under Rule 11 of the Central Excise Valuation Rules.
Vishal Agrawal and Tuhina Sinha, the counsels for the assessee contended that there was no allegation or evidence that JSPL and JPL are connected to the assessee and was no allegation that the assessee was either the holding or the subsidiary company of either JSPL or JPL and the only allegation was that they are associated companies and hence they are interconnected undertakings.
Bhagwat Dayal and Rakesh Agarwal, the counsels for the department relied on the decisions made by the lower authorities and contended that the issuance of show cause notice to the assessee was for proposing to recover under Section 11A of the Central Excise Valuation Rules,1944 and the duty allegedly short paid invoking extended period of limitation and proposing to impose penalties.
The Bench observed that rates of levy of excise duty on excisable goods can be based on the quantity (specific rate of duty) or value (ad valorem rate of duty) and on some goods, duties can be based on the Retail Sale Price or even on the capacity of production (compounded rate of duty) for the vast majority of the goods, the duties are chargeable based on value and such value shall be, as per Section 4 of the Central Excise Act the “transaction value” for each removal of the goods.
The two-member bench comprising Dilip Gupta (President) and Subba Rao (Technical) held that the levy of excise duty on excisable goods was based on the quantity and values contained as per section 3 of the Central Excise Act.
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