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CX - Lower authorities ignoring submission made by appellant - Castor oil compound being exempted by notfn. 3/2006, demand of duty on ground of undervaluation does not arise: CESTAT

By TIOL News Service

MUMBAI, JAN 09, 2016: The appellant is engaged in the manufacture of Cable Jointing Kits which are not chargeable to CE duty as the activity does not amount to 'manufacture'.

For the assembly of Cable Jointing Kits, one of the inputs that is used is "Castor Compound". The appellant was paying CE duty on the captively consumed "Castor Compound" taking its value to be 110% of the cost of production in terms of Rule 6 of the Valuation Rules, 2000.

Revenue contention is that duty should have been paid on the value at which such goods were sold in the market. Therefore, differential duty demand for the period April 2010 to September 2010 was issued and confirmed by the adjudicating authority and the Commissioner (Appeals) upheld the same.

Aggrieved, the assessee is before the CESTAT.

It is submitted that "Castor Compound" is nothing but Castor Oil falling under Tariff Item 15180019 and exempted under Notification no. 3/2006-CE [sr. no. 11].

The Bench observed -

"4. We find that neither the classification nor the availability of exemption on this compound is disputed from the adjudication order dt. 27.12.2011. We find that the appellant had submitted before the authorities that the Castor Oil compound is exempted from excise duty under the said notification. From the adjudication order as well as the order of Commissioner (Appeals) it is seen that this point was ignored by the authorities. It is also brought to our notice that the demands for the different periods were set aside under Order-in-Appeals dt. 14.10.2013, 26.02.2014 and 22.12.2014."

The CESTAT concluded - The product being exempted, the question of demand of duty does not arise.

The appeal was allowed.

(See 2016-TIOL-92-CESTAT-MUM)


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