Custom, Excise & Service Tax Tribunal
G D R Cylinders Pvt Ltd vs Tirupati - G S T on 20 February, 2024
(1)
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
HYDERABAD
REGIONAL BENCH - COURT NO. - I
Excise Appeal No. 31154 of 2018
(Arising out of Order-in-Appeal No.TTD-EXCUS-000-APP-179/17-18 dated 28.03.2018
passed by Commissioner of Customs & Central Tax (Appeals), Guntur)
G D R Cylinders Pvt Ltd., .. APPELLANT
B 16, Industrial Development Area,
Renigunta, Chittoor District,
Andhra Pradesh - 517 520.
VERSUS
Commissioner of Central Tax .. RESPONDENT
Tirupati - GST No. 9/86, West Church Complex, Amaravathi Nagar, MR Palli Road, Thirupathi, Chittor, Andhra Pradesh - 517 502.
WITH Excise Appeal No. 30899 of 2018 (Arising out of Order-in-Appeal No.TTD-EXCUS-000-APP-180/17-18 dated 28.03.2018 passed by Commissioner of Customs & Central Tax (Appeals), Guntur) G D R Cylinders Pvt Ltd., .. APPELLANT B 16, Industrial Development Area, Renigunta, Chittoor District, Andhra Pradesh - 517 520.
VERSUS
Commissioner of Central Tax .. RESPONDENT
Tirupati - GST
No. 9/86, West Church Complex,
Amaravathi Nagar, MR Palli Road,
Thirupathi, Chittor,
Andhra Pradesh - 517 502.
WITH
Excise Appeal No. 30900 of 2018
(Arising out of Order-in-Appeal No.TTD-EXCUS-000-APP-181/17-18 dated 28.03.2018 passed by Commissioner of Customs & Central Tax (Appeals), Guntur) G D R Cylinders Pvt Ltd., .. APPELLANT B 16, Industrial Development Area, Renigunta, Chittoor District, Andhra Pradesh - 517 520.
VERSUS
Commissioner of Central Tax .. RESPONDENT
Tirupati - GST
No. 9/86, West Church Complex,
Amaravathi Nagar, MR Palli Road,
Thirupathi, Chittor,
Andhra Pradesh - 517 502.
AND
Excise Appeal No. 30901 of 2018
(2)
(Arising out of Order-in-Appeal No.TTD-EXCUS-000-APP-182/17-18 dated 28.03.2018 passed by Commissioner of Customs & Central Tax (Appeals), Guntur) G D R Cylinders Pvt Ltd., .. APPELLANT B 16, Industrial Development Area, Renigunta, Chittoor District, Andhra Pradesh - 517 520.
VERSUS
Commissioner of Central Tax .. RESPONDENT
Tirupati - GST
No. 9/86, West Church Complex,
Amaravathi Nagar, MR Palli Road,
Thirupathi, Chittor,
Andhra Pradesh - 517 502.
APPEARANCE:
None for the Appellant (Exparte).
Shri Pradeep Saxena & V Srikanth Rao, Authorised Representatives for the Respondent CORAM: HON'BLE Mr. ANIL CHOUDHARY, MEMBER (JUDICIAL) HON'BLE Mr. A.K. JYOTISHI, MEMBER (TECHNICAL) FINAL ORDER No. A/30280-30283/2024 Date of Hearing:20.02.2024 Date of Decision:20.02.2024 [ORDER PER: ANIL CHOUDHARY] The appellant assessee is absent inspite of service of notice by e-mail. Today being the third consecutive date when the appellant is absent without any communication even for adjournment. Accordingly, the appeal is taken up for ex-parte hearing with the assistance of Learned AR for Revenue. All four appeals, being on same issue, are taken up together for disposal.
2. Heard the Learned AR for Revenue and perused the records. Vide Order-in-Appeal dated 28.03.2018 the Assistant Commissioner of Central Tax, Tirupati have confirmed the differential central excise duty of Rs. 31,966 for the period December 2011 to January 2012 along with interest and further penalty of Rs. 15,893/- was imposed under Section 11AC of the Act. The proposed penalty under Rule 25 of Central Excise Rules was dropped penalty Rs. 5,000/- each was imposed under Rule 26 of Central Excise Rules on the i) M. Muriganandam, Managing Director, ii) R. Ravi Verma, Director and iii) M.P. Krishnamachari, General Manager of the appellant. Penalty of Rs. 5,000/- was also imposed on M/s Mehala Transport and its partner Shri N Muthu Rama Lingam under Rule 26A. The same issue is involved in all the 4 appeals.
(3) Appeal No. Period Amount in Penalty
dispute
E/31154/2018 December 2011 to 31,966 15,893
July 2012
E/30899/2018 April 2014 to 2,78,927 25000
February 2015
E/30900/2018 March 2015 to 66,993 6,000
January 2016
E/30901/2018 July 2013 to March 1,48,790 74,395
2014
3. The appellants manufacture LPG cylinders of various sizes falling under central excise tariff heading/sub-heading no. 7311 00 10. As per the sale agreements entered into with their customers, viz., M/s Bharath Petroleum Corporation Ltd., M/s Hindustan Petroleum Corporation Ltd., and M/s Indian Oil Corporation Ltd., the appellants have to deliver the final products on the basis of gross delivery price/net delivery price i.e., inclusive of all taxes excise duty and the freight charges. To deliver their final products on the basis of Gross Delivery Price/Net Delivery Price (herein after referred to as GDP/NDP) as agreed upon which is inclusive of all taxes, excise duty and the freight. But, the appellants are arriving at the assessable value based on the GDP/NDP of their final products after claiming the abatements/deductions towards freight, excise duty, sales tax etc. The Officers of Central Excise, P&I Unit, Tirupathi Division have gathered intelligence that the appellant are indulging in undervaluation of the goods by inflating the freight charge over and above the actual freight charges and are claiming such inflated / high freight charges as abatement from the GDP/NDP value of their final products which results in evasion of central excise duty. During the investigation, it is also found that the appellants have indulged in inflating freight charges through their dummy transport unit i.e. M/s Sri Mehala Transports, Chennai and then claimed as deductions/abatement from the GDP/NDP of the cylinders leading to contraction in the assessable value, which amounted to undervaluation of final product and ultimately resulted in short payment of Cenvat duty and Edu/Sec.Higher Edu.Cess thereon to the extent of undervaluation. Thus, the inflated freight/abnormal freight charged claimed by the appellant as a deduction from the GDP/NDP values is not an admissible deduction and is in the contravention of proviso to Section 4(1)(b) of Central Excise Act, 1944 read with Rule 5 of Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000, Rules 4, 6, 8 and 11 of Central Excise Rules, 2002 necessitating recovery measures of duty short paid by invoking proviso (4) to Section 11A(1) of Central Excise Act, 1994. In this regard, a show cause notice was issued to the appellants for an amount of Rs. 31,966/- being differential duty liability for inflated freight charges during the period 12/2011 to 07/2012 under Section 11A(1) of the Central Excise Act, 1994 along with interest under Section 11AA and penalty under Section 11AC of the Central Excise Act, 1994. Further, penalties have been imposed against
i) Shri M. Muriganandam, MD of M/s GDR Cylinders Pvt Ltd., ii) Shri R. Ravi Verma, Director of M/s GDR Cylinders Pvt Ltd., iii) Shri M.P. Krishnamachari, GM of M/s GDR Cylinders Pvt Ltd., iv) M/s Sri Mehala Transport, Chennai and
v) Shri M. Muthuramalingam, Partner of M/s Sri Mehala Transport, Chennai under Rule 26 of the Central Excise Rules, 2002. After thorough examination of the issue, the respondent confirmed the demand along with interest and penalty under Section 11AC and also impose penalty of Rs. 5,000/- against each person/company proposed in the SCN under Rule 26 of the Central Excise Rules, 2002.
4. Aggrieved with the impugned order, the appellant had appealed before the Commissioner (Appeals) and all the appeals were dismissed hence the appellant is before this Tribunal.
5. As per the grounds of appeal in the appeal memo, it is urged in the facts and circumstances assessable value for the purpose of calculating excise duty payable is to be determined by Rule 5 of Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000 read with Section 4(1)(a) of the Act. As per this provision, where excisable goods are sold for delivery at a place other than the place of removal, the value of such excisable goods shall be deemed to with the transaction value, excluding the cost of transportation from the place of removal up to the place of delivery of such goods. Thus, as admittedly the place of removal in the facts of the instant case is other than the factory premises of the appellant, outward freight charges incurred have been deducted from contracted delivery price, for determining the assessable value for the purpose of calculating duty.
6. Further urges that the Court below have assumed the freight charges shown have been inflated willingly with intention to deflate/reduce assessable value for the purpose of excise duty. The same is lower than those claimed by the appellant. The appellant have relied on the precedent ruling in SnH Steels Vs CC [2017 (358) ELT 1070 (Tri-Chandigarh)]. It is further urges that for argument sake even, for the allegation of Revenue that appellant has inflated freight charges, Revenue does not have to take (5) adverse view as freight charges are also liable for service tax under GTA Service and appellant is entitled to credit of same as input tax and hence situation is revenue neutral. It is further urged that the demand is based on assumptions and presumptions and is fit to be set aside. Further urged that the freight charges shown in the invoice and paid and are actual freight charges.
7. Opposing the appeal, Learned AR for Revenue Shri Pradeep Saxena and Shri V. Srikanth Rao interalia supported the impugned order. They further state that under similar facts and circumstances also in the same Commissionerate this Tribunal have dismissed the appeal of MM Cylinders PVt Ltd., who are also manufacturer and supplier of empty LPG cylinders to various oil companies. Against them also there was similar allegation against inflation of transport charges and thus reduction in the assessable value within the average composite price paid by oil companies. This Tribunal held that there is no infirmity in impugned order confirming demand with interest as well as imposing penalty. The Tribunal had taken notice that, inspite of inflation in the price of inputs, the assessee have reduced the assessable value. Further penalty imposed was also confirmed, reported at [2012 (277) ELT 78 (Tri-Bang)].
8. Further urges that MM Cylinders had appealed before Hon'ble Supreme Court and the same was dismissed by the Apex Court at the admission stage itself and the issue is settled in favour of the Revenue and against the assessee.
9. In view of the settled decision of law and the judgment of this Tribunal in MM Cylinders being confirmed by Hon'ble Supreme Court in MM Cylinders Vs C [2014 (302) ELT 28 (SC)], we dismiss the appeals, being without any merits.
(Operative part of this Order was pronounced in court on conclusion of the hearing) (ANIL CHOUDHARY) MEMBER (JUDICIAL) (A.K. JYOTISHI) MEMBER (TECHNICAL) jaya