Custom, Excise & Service Tax Tribunal
M/S Kirloskar Ferrous Industries Ltd vs Commissioner Of Central Excise, ... on 17 February, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/633/2007-DB, E/683/2007-DB [Arising out of Order-in-Original No. 06/2007-Commr. dated 13/06/2007 passed by Commissioner of Central Excise & Customs, Belguam] For approval and signature: HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes M/s KIRLOSKAR FERROUS INDUSTRIES LTD, BEVINAHALLI, P.O. HITNAL, Dist. Koppal. Appellant(s) Commissioner of Central Excise, Customs and Service Tax, Belgaum, NO. 71, CLUB ROAD, CENTRAL EXCISE BUILDING, BELGAUM - 590001. Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax, BELGAUM NO. 71, CLUB ROAD, CENTRAL EXCISE BUILDING, BELGAUM 590001. Respondent(s)
M/s KIRLOSKAR FERROUS INDUSTRIES LTD VILL BEVINA HALLI, PO HITNAL DIST. KOPPAL. Respondent(s) Appearance:
Shri M.S. Nagaraj, Advocate For the Appellant Shri Pakshi Rajan, A.R. For the Respondent Date of Hearing: 17/02/2016 Date of Decision: 17/02/2016 CORAM :
HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER Final Order Nos. 20338 & 20339 / 2016 PER ASHOK K. ARYA M/s Kirloskar Ferrous Industries Ltd., Bevinahalli Village, Koppal Dist., filed appeal against the Order dated 12.6.2007 (issued on 13.6.2007) of the Commissioner of Central Excise and Customs, Belgaum. Against the same order of the Commissioner, the Revenue has also filed appeal. Both these appeals are being decided by this common order.
1.1. The matter mainly concerns with the inclusion of cost of pattern development charges in the assessable value of the castings being manufactured by the assessee. In this case, Commissioner of Central Excise, Belgaum had issued a show-cause notice dated 12.5.2000 which had been adjudicated by the Commissioner vide Order-in-Original No. 10/2002 dated 31.7.2002. The said Order-in-Original dated 31.7.2002 was appealed before the CESTAT and the CESTAT decided the appeal vide Final Order No. 1191/2005 dated 20.7.2005 interalia holding that the demands could be re-worked out after considering the prayer of time-bar. By the order dated 20.7.2005, the CESTAT set aside the penalty and interest and allowed the appeal by way of remand for re-working out the duty in terms of the direction given in this order for re-examining the aspect pertaining to availment of Modvat credit.
1.2. Consequently, the Commissioner of Central Excise, Belgaum passed the impugned order dated 12.6.2007 (issued on 13.6.2007) wherein he interalia held as under :
1. The said manufacturer in his letter BGM/ADJ/07 dated 11.12.2006 addressed to this office has informed that they have not amortized the cost of pattern equipments as the duty of Rs. 45 lakhs was deposited in advance. Therefore, they are directed to furnish invoice-wise amortization amount of pattern charges and differential duty thereon, on castings manufactured, by using the said patterns in question and removed, from the beginning, to the Assistant Commissioner of Central Excise, Bellary and request for appropriation of the duty so calculated out of the advance deposit of Rs. 45 lakhs until the entire amount of Rs. 45 lakhs is exhausted. Thereafter, they are directed to include the amortised cost of the pattern in the value of the castings and discharge the duty liability as per provisions of Law.
2. The Assistant Commissioner of Central Excise, Bellary is also directed to verify the correctness of the differential duty furnished by the said manufacturer and order for the appropriation of the duty liability out of the advance deposit of Rs. 45 lakhs till the amount exhausts.
3. Though the amount of Rs. 45 lakhs was paid by them after detection of non-payment of duty on cost of moulds/patterns, by the department, however considering the fact that they paid the entire amount of duty involved of Rs. 45 lakhs in advance instead of paying duty worked out only on the amortized value, which, for the period involved in the case would have been much less, I take a lenient view in the matter and impose a penalty of Rs. 1,00,000/- only 9Rupees one lakh only) under Rule 173 (Q) of erstwhile Central Excise Rules, 1944.
4. I hold that the Modvat Credit of Rs. 1,96,083.00 taken in respect of the pattern received from M/s Techser Tools Pvt. Ltd., is admissible under the Rule 57(Q) of erstwhile Central Excise Rules, 1944.
2. The Revenue has also filed appeal against the Commissioners above impugned order dated 12.6.2007 with the prayer that the impugned order be set aside by remanding the case back to the original authority.
3. Shri M.S. Nagaraja, learned advocate appeared for the assessee M/s Kirloskar Ferrous Industries Ltd., who interalia submitted as follows :
The Respondent, Commissioner failed to consider the plea of time-bar which was the direction of the CESTAT in the Final Order dated 20.7.2005.
There is a delay of almost 4 years and, therefore, the demands are time-barred.
The period mentioned in the show-cause notice is upto 31.3.1997. The demand should be restricted to the period mentioned in the show-cause notice. The order travels beyond 31.3.1997 and, therefore, the impugned order is required to be set aside as it is not legal, proper and correct.
The Respondent, Commissioner imposed penalty of Rs. 1,00,000/- under Rule 173(Q) in violation of direction issued by the Honble Tribunal.
The Tribunal vide its Final Order No. 1191/2005 had accepted that there was no suppression of fact and hence the penalty and interest was set aside. Honble Tribunal remanded the matter to the Commissioner for re-working out the duty as the duty was directly charged on the development charges instead of amortized value of castings. Instead the Commissioner imposed penalty in violation of the direction of the Honble Tribunal.
4. We have carefully considered the facts on record and the submissions of both the sides.
5. We find that in terms of the Tribunals earlier order dated 20.7.2005, the Commissioners order dated 12.6.2007 has failed to re-work out the duty demand after reconsidering the prayer of time-bar though he issued direction to the assessee, M/s Kirloskar Ferrous Industries Ltd. to furnish invoice-wise amotization amount of pattern charges and differential duty thereon to the Assistant Commissioner of Central Excise, Bellary, who was to appropriate the duty so calculated out of the advance deposit of Rs. 45 lakhs. The Commissioner vide his order dated 12.6.2007 also directed the Assistant Commissioner of Central Excise, Bellary to verify the correctness of the differential duty furnished by M/s Kirloskar Ferrous Industries Ltd.
5.1. The Commissioner in the impugned order also imposed penalty of Rs. 1,00,000/- under Rule 173(Q) of the Central Excise Rules, 1944, on the assessee, M/s Kirlosakar Ferrous Industries Ltd., which is not correct and is against the Final Order dated 20.7.2005 passed by this Tribunal. Therefore, the penalty of Rs. 1,00,000/- imposed under Rule 173(Q) deserves to be set aside and is hereby set aside.
5.2. The Commissioner in the impugned order has held that Modvat credit of Rs. 1,96,083/- is admissible with which we agree.
5.3. In respect of reworking / re-quantification of duty after specifically allowing the prayer of time-bar / limitation, when there has been no suppression of facts on the part of the manufacturer namely, M/s Kirloskar Ferrous Industries Ltd., the matter is remanded back to the Commissioner of Central Excise, Belgaum to decide the same within next four months after seeking a report on the subject matter from the Assistant Commissioner of Central Excise in-charge of the assessee unit i.e. M/s Kirloskar Ferrous Industries Ltd., who are directed to immediately submit necessary documents on the subject matter to the Central Excise Department.
6. Both the appeals are decided as above i.e. by remanding the subject matter to the Commissioner of C. Excise, with the directions as given above and by setting aside the penalty imposed in the impugned order.
(Operative portion of the order was pronounced in open court on 17/2/2016) (ASHOK K. ARYA) TECHNICAL MEMBER (ARCHANA WADHWA) JUDICIAL MEMBER /vc/