- (1.) The respondent herein is a 100% EOU engaged in the manufacture of instant tea falling under Chapter 2101.20 of schedule to the Central Excise Tariff Act, 1985. The present appeal is concerned with clearances of their product to two sister units on payment of duty in terms of Notification No.8/97 - CE dated 1.3.1997 and Notification No.23/2003 CE dated 31.3.2003. The first notification would cover the period 1.11.2000 to 30.3.2003 and the second notification would cover the period 31.3.2003 to 31.5.2005. Inasmuch as the instant tea was manufactured wholly out of indigenous raw materials, the notifications aforesaid applied and whatever was in excess of what is chargeable by way of excise duty on the said tea is exempted. It is not in dispute that the said notifications applied in the facts of the instant case.
(2.) A show cause notice dated 23.9.2005 was issued by the Department stating that ordinarily Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 would apply and that the tea being captively consumed and not sold should be valued at 115% of the cost of production or manufacture of such goods. However, the show cause notice then goes on to say that as the said tea is transferred only to two sister concerns and no sale is involved, the assessable value of instant tea removed to the respondent's own units would be determined on the basis of the export price of similar goods and not 115% of the cost of production.
(3.) The order in original dated 31.5.2006 passed by the Additional Commissioner upheld the show cause notice and confirmed the duty amount, interest, and penalty as follows:- "ORDER I confirm the duty amount of Rs. 42,86,079/- (Rupees Forty two lakhs, eighty six thousand and seventy nine only) (Centvat: Rs.42,62,545/- and Education Cess Rs.23,534/-) under Section 11A (1) of the Central Excise Act, 1944. I demand appropriate interest on the above amount confirmed under Section 11AB(1) of the Central Excise Act, 1944. I impose a penalty of Rs.42,86,079/- (Rupees Forty two lakhs, eighty six thousand and seventy nine only) under Section 11A (1) of the Central Excise Act, 1944. As I have imposed penalty on them under Section 11AC of Central Excise Act, 1944, I do not impose a separate penalty under Rule 173Q or 209 of erstwhile Central Excise Rules 1944 and Rule 25 of erstwhile Central Excise (No2) Rules, 2001 read with Section 38A of Central Excise Act, 1944 and Rule 25 of Central Excise Rules, 2002.";