Custom, Excise & Service Tax Tribunal
Balkrishna Industries Limited vs Commissioner Of Central Excise And ... on 28 April, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/947/05-MUM [Arising out of Order-in-Appeal No. BPS/(408) 181A/13470/2004 dtd. 16/12/2004 passed by the Commissioner of Central Excise & Customs(Appeals), Aurangabad] For approval and signature: Honble Mr. P.K. Jain, Member(Technical) Honble Mr Ramesh Nair, Member(Judicial) =======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
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 : seen
of the Order?
4. Whether Order is to be circulated to the Departmental: Yes
authorities?
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Balkrishna Industries Limited.
:
Appellants
VS
Commissioner of Central Excise and Customs, Aurangabad
:
Respondent
Appearance
Shri. Prashant Paranjape, Advocate for the Appellants
Shri. V.K. Shastri, Asstt. Commissioner(A.R.) for the Respondent
CORAM:
Honble Mr. P.K. Jain, Member (Technical)
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 28/4/2015
Date of decision /2015
ORDER NO.
Per : Ramesh Nair
The appeal is directed against Order-in-Appeal No. BPS/(408) 181A/13470/2004 dtd. 16/12/2004 passed by the Commissioner of Central Excise & Customs(Appeals), Aurangabad, wherein Ld. Commissioner confirmed demand of Rs. 4,04,487/- however set aside the demand of Rs. 1,04,507/- and appeal filed by the appellant was disposed of accordingly. The fact of the case is that the appellant are engaged in the manufacture of tyres and tubes and flaps of different sizes falling under Chapter 40 of Central Excise Tariff Act, 1985. After manufacture of tyres and tubes the appellant pack bought out flaps in the composite packing and cleared the same. However the appellant is not including the value of bought out flaps in the assessable value of tyres and tubes, cleared the as set of tyres for the purpose of discharging excise duty. The appellant is taking permission under Rule 51A of erstwhile Central Excise Rules, 1944 from time to time, however one permission letter bearing F. NO. V CH 40 (10) 72/TB/92/Pt-1 dated 17/8/99 contains condition No. (10) i.e. value of flaps should be included in the assessable value of tyres and tubes at the time of clearance. The appellant without taking note of such condition kept on clearing the tyres and tubes without including the value of flaps, therefore investigation was carried out, during which statement of Shri. R.M. Kulkarni, authorized signatory was recorded on 16/5/2000 under Section 14 of Central Excise Act, 1944. Consequent to the investigation, the appellant paid the Central Excise duty of Rs. 4,04,487/- for the period from Aug 1999 to November 2000, however appellant did not pay Central Excise duty of Rs. 1,64,508/- for the period December, 2000 to 22/2/2001. A show cause notice bearing No. PREV/VII/GP-1/BKT/5-2000 dated 6/2/2003 was issued proposing :
(a) Recovery of Central Excise duty amounting Rs. 1,64,508/- under proviso to sub-section (1) of Section 11A of Central Excise Act, 1944.
(b) Confirmation of Central Excise duty amounting Rs. 4,04,487/- and appropriation thereof as said amount already paid by the appellant.
(c) Imposition of penalty under Section 11AC of Central Excise Act, 1944 read with Rule 173Q of Central Excise Rule, 1944.
(d) Charging of interest under Section 11AB of Central Excise Act, 1944.
The appellant represented their defence on merit as well as on time bar. The original adjudicating authority passed the following order:
Order
i) I confirm the demand of Central Excise duty of Rs. 5,68,995/-(Rs. 1,64,508/-+ Rs. 4,04,487/-) under proviso to Section 11A(1) of Central Excise Act, 1944 against M/s. Balkrishna Industries Ltd. (Unit: Balkrishan Tyres), B-66 Aurangabad. The amount of Rs. 4,04,487/- already paid by the noticee is appropriated against the aforesaid amount of confirm demand. The noticee should pay the remaining amount of Rs. 1,64,508/-
(ii) I impose total penalty of Rs. 5,68,995/- on M/s. Balkrishna Industries Ltd. (Unit: Balkrishna Tyres), B-66, Waluj, Aurangabad under Section 11AC OF Central Excise Act, 1944.
(iii) I confirm the recovery of interest at applicable rate under Section 11AB of Central Excise, 1944 from M/s. Balkrishna Industries Ltd. (Unit: Balkrishna Tyres), B-66, Waluj, Aurangabad.
Aggrieved by the said order-in-original, appellant filed appeal before the Commissioner(Appeals), who vide the impugned order held on merit that value of flaps is not includible in the assessable value of tyres and tubes. However he confirmed the demand of Rs. 4,04,487 on the ground that this amount already paid by the appellant but same was not paid under protest. However demand of Rs. 1,64,508/- was set aside. Aggrieved by the said order the appellant is before us.
2. Shri. Prashant Paranjape, Ld. Counsel for the appellant submits that as regard issue of inclusion of value of flaps and total duty due thereupon was investigated and consequent to the investigation appellant paid duty of Rs. 4,04,487/- and subsequently show cause notice was issued and the same is culminated in the adjudication order. He submits that appellant has defended the case right from adjudication stage up till the stage of this appeal on merit. Therefore the amount paid by them must be treated as paid under protest. In view of this fact order of the Commissioner(Appeals) inasmuch as confirmation of demand of Rs. 4,04,487/- on the ground that the same was not paid under protest is not legal and correct. He submits that only issue before this Tribunal is that confirmation of demand by the Ld. Commissioner(Appeals) on the ground that the same was not paid under protest by the appellant is correct or otherwise. As regard merit of the case Ld. Commissioner (Appeals) categorically held that the value of flaps is not includible in the assessable value of tyres and tubes. It is his submission that once the Ld. Commissioner(Appeals) held that value of flaps is not includible in the assessable value of the tyres and tubes, there is no other option except to drop the entire demand on the value of flaps. He submits that present case is against demand proceedings and not case of refund. The refund will arise only consequent to the outcome of this appeal proceedings. Therefore Ld. Commissioner did not have jurisdiction to confirmed the demand of Rs. 4,04,487/- despite holding that the value of flaps is not includible in the value of tyres and tubes. Ld. Counsel placed reliance on judgment in case of Commissioner of Central Excise, Ahmedabad-II Vs. Modern Denim Ltd.(2013(298)ELT 528(Guj.).
3. On the other hand, Shri. V.K. Shastri, Asstt. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that the value of flaps was correctly includible in the assessable value of tyres and tubes. He submits that issue on merit whether the value of flaps should be included or otherwise in the assessable value of tyres and tubes was not challenged by the appellant and duty paid was not under protest therefore the Ld. Commissioner(Appeals) has correctly confirmed the demand of Rs. 4,04,487/-. He placed reliance on the judgment in case of Mahavir Aluminium Ltd. Vs. Commissioner of Central Excise, Jaipur[2005(191) ELT 843(Tri. Delhi.).
4. We have carefully considered the submissions made by both the sides.
5. From the show cause notice it is observed that proceedings started from investigation, issuance of show cause notice, adjudication order and then appeal proceedings before the Commissioner(Appeals) on the issue of merit that whether the value of bought out flaps is includible in the assessable value of tyres and tubes cleared by the appellant from his factory. It is observed that the appellant after commencement of the investigation paid duty of Rs. 4,04,487/-. After completion of investigation a show cause notice was issued on the issue of merit wherein it was proposed to confirmed demand of Rs.4,04,487/- and appropriation thereof as said amount was already paid by the appellant and amount of Rs. 1,64,508/- was also proposed to be demanded which was not paid by the appellant. The appellant defended the show cause notice but in the adjudication order both the demand amounts were confirmed. The appellant challenged this demand on the merit before the Commissioner(Appeals), who though categorically held that value of flaps is not includible in the assessable value of tyres and tubes and set aside the demand of Rs. 1,64,508/- however demand of Rs. 4,04,487/- was confirmed only on the ground that the appellant has not paid this amount under protest. With this set of facts it is clear that the Ld. Commissioner held that the value of flaps is not includible in the assessable value of tyres and tubes. This part of the order was not challenged by the Revenue therefore the same attained finality. Since both the demand i.e. 4,04,487/- and 1,64,508/- were covered under show cause notice and the appellant have been challenging these amounts right from the show cause notice stage, payment of Rs. 4,04,487/- shall be deemed to have been made under protest. Moreover, once the Ld. Commissioner(appeals) has taken clear stand that value of flaps is not includible in the assessable value of tyres and tubes entire demand proposed in the show cause notice and subsequently confirmed in the adjudication order must be dropped. For ease of reference extract of the findings of the Ld. Commissioner(Appeals) is reproduced as under:
6. In the instant case the Appellants are the manufacturer of the tyres and tubes falling under Chapter 40 of the CETA, 1985. They used to bring flaps from outside and dispatched the same along with tyres and tubes for which necessary permissions was granted under Rule 51A of the Central Excise Rules, 1944 by the Commissioner of Central Excise & Customs, Aurangabad. The period involved in the show cause notice is from August, 1999 to 22.02.2001.The details are given as under:-
S.N. F.No. & date under which permission was granted.
Validity of the permission.
Whether permission includes the condition of inclusion of value of Flaps in A. V.
01. VGN 40(10)73 TB/92 dated 12.02.1996 31.12.1996 No
02. VGN 40(10)73 TB/92 Pt.I dated 02.04.1998 31.12.1998 No
03. VGN 40(10)73 TB/92 Pt.I dated 20.08.1999 30.06.2000 Yes
04. VGN 40(10)73 TB/92 dated 24.02.2001 23.02.2001 to 31.03.2001 No It has been argued by the Appellants that they had not availed any Modvat Credit on the said bought out flaps. They had simply packed the same in the set of tyres and tubes as per the requirement of their customers and also they did not subject them to any manufacturing process. Therefore, the incidence of value of the flaps is not required to be added in the assessable value. To support their say they placed reliance upon the case laws cited in the grounds of appeal and at the time of personal hearing. Therefore, the condition laid down for recovery of duty on the value of the flap is not as per the law. The ratio of the case laws cited by the Appellants is squarely applicable in the instant case. The amount already paid by the Appellants can not be interfered as the same is not paid under protest. However, the amount of Rs.1,64,508/- can not be demanded. In the instant case the department has not been able to prove that there was any intention of the Appellants to evade the payment of duty. In the instant case the period involved is from August 1999 to 22.02.2001 whereas the show cause notice was issued on 06.02.2003 i.e. after expiry of a period of 1 year. It is evident from the correspondence exchanged between the department and the Appellants that there can be no willful suppression or mis-statement of facts etc. Therefore, on the limitation also the case does not survive. As the demand of duty itself is not sustainable, the imposition of penalty under Section 11AC read with Rule 173Q and demand of interest under Section 11AB is not sustain able.
7. In view of the above, I am inclined to accept the contentions of the Appellants. I, therefore, set aside the confirmation of demand worth Rs.1,04,507/- and imposition of penalty and demand of interest. Since the Appellant have paid Rs.4,04,487/- without any protest, I have no alternative but to confirm the same. The impugned OIO is modified to the above extent.
From the above findings, we find that it is absolutely absurd that in one hand it was held that value of flaps in not includible in the assessable value of the tyres and tubes and on the other hand the demand of duty on such value of flaps has been confirmed. We are of the view that once it is held that value of flaps is not includible in the assessable value of tyres and tubes, the demand of duty on such value of flaps would not sustain irrespective of fact whether such duty was already paid either under protest or otherwise. The entire proposal of demand and confirmation thereof by the adjudicating authority is on the root cause of includibility of value of flaps in the assessable value of tyres and tubes. When the Ld. Commissioner(Appeals) held that value of flaps is not includible, such root stands cut and therefore every proposal which is based on such root shall not stand. Our aforesaid view get support from the judgment in the case of Modern Denim Ltd(supra) wherein Honble Gujarat High Court held as under:
4.?The Tribunal in its impugned order extensively quoted from the order of the adjudicating authority. Certain parts of the relevant observation and findings in the OIO, are extracted herein below.
Therefore, the question of suppression of facts or misdeclaration with an intention to evade duty in baseless as not borne on any tangible evidences rather there is not averment or any material which can create any doubt on bona fide of the assessees action. Therefore, the notice issued on 10th September, 2004 as well as corrigendum dated 7th June, 2005 and 28th July, 2005 were without any authority of law and are held to be not justified. Thus, the total sum of Rs. 10,34,098/- was honoured by the physical payment by the party on its own volition i.e. without challenge and protest, which was leviable and payable according to them. In fact, the quantification of the demand was carried out by the Superintendent and conveyed to the party where the price of the goods cleared was taken as cum-duty price. But the period involved was from 1-3-2000 to 31-3-2000. However, such payment was really short as the demand was worked out for Rs. 14,48,878/- for period 16-9-1999 to 31-8-2002. I further find that, on merits, the demand was initially as conveyed for the period as demanded in show cause notice dated 10-9-2004 as same was due in terms of the circular dated 6-2-2001. When the parent notice of demand dated 10-9-2004 itself was barred by limitation holding the corrigendum as legal, proper or valid, does not arise. Those were without authority of law. To that extent, the submission of the ld. Counsel and the reliance on case laws as extracted above is very much relevant and are apt to the fact and circumstances of the present case. Therefore, the question of penalty does not arise. Therefore is no material which warrants to hold that even there was an element of evasion or avoidance of duty on part of the noticee company as the confusion was prevailing and percolating up to the highest level. Since the payment made by the party was on written communication by way of demand which on merit was sustainable and payable and hence the demand so paid is hereby held as legal, proper sustainable and maintainable. They do not deserve any refund neither on merit nor on limitation. However, jacking them with further liabilities after limitation period is over, is not justified and cannot be maintained and sustained. Therefore, the proceedings started by issuance of show cause notice dated 10-9-2004 and tried to be fortified or enhanced by corrigendum are held to be inappropriate and illegal. Thus, demands and other proposed cause of actions are barred by limitation as provided under provisions of Section 11A of Central Excise Act, 1944.
5.?After considering the facts and the findings of the adjudicating authority, the Tribunal arrived at its own conclusion as under.
It can be seen from the above reproduced findings of the lower adjudicating authority that he has clearly held that show cause notice dated 10-9-2004 as well as corrigendum dated 17-6-2005 and 28-7-2005 were without any authority of law and inappropriate and illegal. It is also his finding that the demands and other proposed causes of action are barred by limitation as provided under provisions of Section 11A of Central Excise Act, 1944. It is to be seen that the Revenue authorities have not filed any appeal against the said Order-in-Original nor they have filed any cross objection against such findings of the adjudicating authority as regards the demand is hit by limitation. In the absence of any objection of appeal from the department, the findings of the adjudicating authority as regard the limitation have attained finality. If that be so, any amount deposited by the assessee during the pendency of the investigation cannot be said to have been paid by him voluntarily towards the duty that is calculated for the relevant period in the show cause notice.
6.?We are in agreement with above conclusion of the Tribunal.
6.1?It deserves to be stated that more particularly when the entire demand in the show cause notice was declared to be barred by limitation, the adjudicating authority erred in concluding that the amount already paid was validly paid and was justified on merits. The reasoning is self contradictory. The amount paid was part of duty, demanded in the show cause notice, which was clearly held to be beyond time. Once the demand was held unsustainable, no amount of duty could have been treated as leviable.
6.2?In the aforesaid view, the appeal is devoid of merits raising no substantial question of law.
7.?Accordingly, the appeal is dismissed.
In view of the above judgment, it is clear that once the demand is set aside for any reason, amount already paid cannot be held as validly paid and cannot be justified on merit. In view of the above High Court judgment we are of the view that the findings of the Ld. Commissioner(Appeals) in the impugned order on one hand holding that value of flaps is not includible in the assessable value of the tyres and tubes and on other hand simultaneously confirmed the demand of Rs. 4,04,487/- already paid only on the ground that the same was not paid under protest are clearly contradictory which is not permissible in law. As regard reliance placed by the Ld. A.R. on the case of Mahavir Aluminium Ltd, we find that in the said judgment, it was held that since assessment order asking the assessee to include value of bought out item in the assessable value was not challenged by them, duty paid was considered as without protest and consequent refund claim not maintainable. The facts of the said judgment are different from the facts of the present case. The appellant challenged show cause notice, order-in-original now by this appeal challenging the impugned order secondly the cited judgment of Mahavir Aluminium Ltd is for refund claim whereas the present case if for demand of duty. Therefore ratio of this judgment relied upon by the Revenue is not applicable in the present case. In view of our above discussions, we are of the view that impugned order inasmuch as confirmation of demand of Rs. 4,04,487/- is not sustainable. Hence the same is modified to that extent. The appeal is therefore allowed.
(Order pronounced in court on____________) P.K. Jain Member (Technical) Ramesh Nair Member (Judicial) sk 2