Hon'ble Judges/Coram:
Dr. Satish Chandra, J. (President) and Ashok K. Arya

ORDER

Ashok K. Arya, Member (T)

1. M/s. Hindustan Insecticides is in appeal against the Order-in-Original No. 8/2011 dated 28.2.2011 passed by the Commissioner, LTU, Delhi whereunder inter alia various demands of Rs. 26,97,254/-, Rs. 2,74,73,600.49 and of Rs. 11,85,461/- along with interest and equivalent penalties have been confirmed.

2. The brief facts of the case are that:

(i) The appellant viz. M/s. Hindustan Insecticides Ltd. are manufacturing DDT falling under Chapter 38 of the First Schedule to the Central Excise Tariff Act, 1985 (CETA). The entire quantity of DDT manufactured by the appellant is sold to the Ministry of Health and Family Welfare, Government of India.

(ii). The dispute pertains to the question whether amount of subsidy received in this regard by the appellant from the Government of India is to be treated as additional consideration for the sale of the goods manufactured by the appellant and sold to the Ministry, Govt. of India. As the Revenue's case is that subsidy is linked with the quantity of DDT manufactured and supplied by the appellant it is required to be added to the 'value' in terms of the Section 4(1)(b) read with Rule 6 of Valuation Rules.

3. With above background, we have heard Shri Amit Jain, ld. Counsel for the appellant and ld. DR Shri H.C. Saini for the Revenue.

4. Based on the appeal memorandum and written submissions, the ld. Advocate for the appellant mainly submits as under:

(i) The subsidy received is not in connection with or by reason of sale of DDT, therefore it is not an additional consideration;

(ii) They rely on the Hon'ble Supreme Court's decision in the case of CCE Vs. Mazagon Dock Ltd. - MANU/SC/2753/2005 : 2005 (187) ELT 3 (SC) saying that the subsidy has been received subsequent to clearance of goods and has no connection with the value of the DDT manufactured and sold.

(iii) The findings of the Commissioner are misplaced since the amount of subsidy received is not linked with the value of the DDT manufactured and sold.

(iv) The amount of subsidy has been given as a policy of the Government to improve the viability and in recognition of social contribution of the appellant manufacturer.

(v) Board's Circular No. 983/7/2014-CX : MANU/EXCR/0007/2014 dated 10.7.2014 dated 10.7.2014 clarifies that fertilizer subsidy is not linked to the buyer and it is not paid on behalf of the individual buyer. Therefore, it cannot be concluded that the subsidy is an additional consideration flowing from the buyer to the manufacturer.

(vi) Reliance is also placed on the following cases:

(a) Coromandel International Ld. Vs. CCE & ST. Visakhapatnam-I - MANU/CB/0087/2014 : 2015 (319) ELT 526 (Tri.-Bang.);

(b) Oil and Natural Gas Corporation Ltd. Vs. CCE, Surat-MANU/CS/0281/2008 : 2015 (320) ELT 614(Tri.-Ahmd.)

5. The ld. AR for the Revenue reiterated the contents of the impugned order.

6. After careful consideration of the facts and submissions of both the sides, it appears that the appellant manufacturer claims that the subsidy is having no connection with the manufacture and supply of DDT. However, this claim of the appellant is not based on the fact on the ground. The impugned order quotes from the decision taken by the Committee of Secretaries for the rehabilitation of the appellant unit, where the decision is mentioned as below:

(i) The existing formula used by the Cost Accounts Branch of Ministry of Financ........