Steel Authority of India Limited Vs Commissioner of Central Excise & Service Tax (CESTAT Kolkata)
The Customs, Excise and Service Tax Appellate Tribunal, Kolkata, examined an appeal challenging a common order confirming excise duty demands, interest, and penalties on alleged undervaluation of refractory materials cleared to related units. The appellant manufactures fire bricks and mortar classifiable under specified tariff items and has a long operational history involving changes in ownership and amalgamation. Prior to amalgamation with a larger steel entity in July 2009, the appellant sold its products to independent customers and steel companies at agreed transaction values without dispute under Section 4(1)(a) of the Central Excise Act. After amalgamation, the appellant supplied refractory materials both to independent customers and sister units, charging prices that were largely similar. Read SC Order: SC Admits Appeal on Revenue Neutrality in Inter-Unit Excise Valuation
Following an investigation initiated in 2011, the department issued two show cause notices alleging that inter-unit clearances were undervalued and should have been assessed under Section 4(1)(b) read with Rules 8 and 9 of the Central Excise Valuation Rules, adopting 110% of cost of production as per CAS-4. Demands totaling over ₹11.79 crore were proposed for the period from August 2009 to March 2015. The appellant contested the allegations, filed detailed replies, and also paid certain differential duty amounts calculated on CAS-4 for later periods.
