CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL CHANDIGARH REGIONAL BENCH - COURT NO. I Excise Appeal No. 60269 of 2024 [Arising out of Order-in-Original No. 04/CE/SRC/Commissioner/J&K/2023-24 dated 04.03.2024 passed by the Commissioner of CGST, Jammu]

M/s Modern Papers ……Appellant Lane No.3, Phase-I, SIDCO Industrial Complex, Bari Brahmana, Samba, J & K – 181133 VERSUS Commissioner of Central Goods & Service ……Respondent Tax and Central Excise, Jammu OB-32, Rail Head Complex, Bahu Plaza, Jammu, J & K - 18001 APPEARANCE:

Shri T.R. Rustagi, Advocate for the Appellant Shri S.K. Meena, Authorized Representative for the Respondent CORAM: HON’BLE MR. S. S. GARG, MEMBER (JUDICIAL) HON’BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL)

FINAL ORDER NO.60207/2026 DATE OF HEARING: 20.11.2025 DATE OF DECISION: 25.02.2026 P. ANJANI KUMAR:

M/s Modern Papers, the appellants assail the order, dated 04-

03-2024, passed by Commissioner of Central Excise, Jammu.

2. Briefly stated the facts of the case are that the appellants are engaged in the manufacture of pesticides and are availing the exemption contained under Notification No. 56/2002-CE dated 14-

11-2002 as amended by Notifications No. 19/2008-CE dated 27-03- 2008 & 34/2008-CE dated 10- 06- 2008; the appellants claimed special rate, for the years 2010-11 to 2016-17, on the ground that actual value addition in their case was at least 39.10% (115% of 34%) and, therefore Modern Papers applied for fixation of special rates; they duly revised applications as per the queries raised and clarifications sought by the authorities. Learned Commissioner passed the impugned order holding, inter alia, that  value addition figures/claims, submitted vide letter dated 17. 11. 2023 by Modern Papers are liable for rejection as not supported by value addition certificates containing reliable data.  the eligibility condition of actual value addition being at least 115% of 34% was satisfied only in respect of four products, namely, Buprofezin 25% SC, Emamectin Benzoate 5% SG, Sulosulfuron 75% WDG, and Chloropyriphos

50%+Cypermethrin 5% EC  no special rate can be given in respect of some items where nil or negative sales value is indicated;

 the value of the finished products should be based on actual sale price and not on the MRP and as per Section 4A of the Central Excise Act, 1944.

 discounts given need to be deducted while arriving at the net sales value; when product-wise details of rebate/discount/cash discount are not available, discounts are to be proportionately taken across all products.

 certificates given by the statutory auditor should be based on the audited balance sheet of the unit for the preceding financial year.

 Year to Year comparison shows considerable variations in the value addition percentages; the appellant has not given any product-wise reasons for year- wise variations in rates of value addition.

3. Shri T.R. Rustagi, Learned Counsel for appellants, submits that there is no difference in the special rates arrived at by the Commissioner and the rates claimed by the appellants. He submits the following as an example.

4. Learned Counsel for appellants, submits that the Commissioner’s observation that the entire data relating to all the applications deserves to be rejected outright as not reliable is incorrect for the following reasons:

 The rates claimed are duly certified by the Statutory Auditor (Chartered Accountant), using the formula prescribed in the Notification No. 56/2002-CE.

 No show cause notice was issued to the Appellant proposing to reject the applications; it is gross violation of the principles of natural justice; this ground alone renders the Order illegal.

 Commissioner travelled beyond the procedure prescribed in the notification for fixing the special rates for actual value addition; the correctness of the special rates claimed by the manufacturer or producer of specified goods is required to be examined only within the parameters and methodology prescribed in the notification