Customs, Excise and Gold Tribunal - Tamil Nadu
M/S. Flowlines Engineering (P) Ltd. And ... vs Cce, Madras And M/S. Flowlines Engg. (P) ... on 4 May, 2001
Equivalent citations: 2001(77)ECC272, 2001(137)ELT1423(TRI-CHENNAI)
ORDER
Shri S.L. Peeran
1. Both the Revenue and the assessee are aggrieved with the Order-in-Original No. 30/96 dated 19.8.96 passed by Commissioner of Central Excise, Madras by which he has confirmed duty demand of Rs. 4,07,372/- in terms of provisions of Section 11A(1) of CE Act and has also imposed a penalty of Rs. 50,000/- under Rule 173Q of the Act. By the same order, he has agreed with the assessee's contention that for arriving at the assessable value, the value declared in the invoice be treated as cum-duty price and allowed deductions on this count. The Revenue is aggrieved on this aspect of the matter.
2. We have heard both sides in the case. Ld. D.R. submits that appellants are not entitled to the deductions on cum-duty price as clearances had been made without payment of duty and question of giving deduction does not arise. On this point, Ld. Advocate pointed out that this issue is now fully settled in terms of Larger Bench judgment rendered in the case of Sri Chakra Tyres as reported in 1999 (108) ELT 361 wherein the bench of 5-Members have laid down the law that in terms of Section 4 (4) (d) (ii) of CE Act, abatement from cum-duty price is required to be given to the assessee even in respect of clearances made without payment of duty.
3. On a careful consideration of the Revenue appeal, we notice that the Commissioner has rightly granted the abatement and the said issue is now covered by the cited Larger Bench judgment. Respectfully following the Larger Bench judgment, we find there is no merit in the Revenue's appeal and the same is rejected.
4. As regards the assessee appeal is concerned, appellant's counsel contend that appellant had been registered as an SSI unit and claimed exemption under Notification No. 175/86 dated 1.3.86. However, due to differences among the partners, the company came to a closure in November, 92 and their turnover was Rs. 19,55,050/- and they surrendered the licence to the department. However, one of the partners had a collaboration with a Singapore based unit and it was floated in the name of Sea Hydro Power India Ltd. in Dec. 92 and declaration had been filed. The total turnover for that period was less than Rs. 12,00,000/-. The department officials visited the office in Jan. 93 and recorded the statements on 4.3.93 and 8.3.93. The said officials of Sea Hydro Power India Ltd. admitted in their statements that they did not have separate factory licence. However, as the appellants Flowline Engineering Ltd. had machinery's and the same were utilised by this new firm along with their officers. They also used their sales invoice besides using their Sales Tax Registration Number. However, there was no financial flow back and the said misuse of Sales tax registration certificate and sales tax invoice did not disentitle the new unit from claiming the benefit and the clearances made by the new firm cannot be said to be that of the clearances of the appellants. He further submitted that when the show cause notice was issued on 1.3.95 with regard to the demands pertaining to the period 92-93 then it is clearly barred by time as department had recorded the statement on 4.3.93 itself. The show cause notice issued after a long lapse of time would be barred by time. He further submitted that the show cause notice raised a demand for Rs. 62,101/- while the correct demand that would be confirmed will be only Rs. 41,811/-.
5. Countering their argument, Ld. DR points out that the new unit did not have a separate Registration under the Factories Act and mere filing of declaration will not be sufficient. The fact that they have used the Sales Tax Registration number of the appellant company and also the sales invoice besides the machinery's as well as the labour of the appellants clearly indicates there was no bifurcation. The same factory was functioning and the new firm was shown only on paper. Therefore, the clearances were rightly clubbed for the purpose of raising duty. He further submitted that the Larger Bench of the Tribunal in the case of Nizam Sugar Ltd. as reported in 2000 (123) ELT 64, a bench of 5-Members clearly held that in case of suppression or fresh facts leading to the allegations to extend larger period comes to light then (sic) can be issued within a period of 5 years from the date of occurrence of the incident. In that view of the matter, the plea of the counsel is totally not correct and not acceptable. As regards the excess duty confirmed by the Commissioner as against the demands made in the show cause notice, Ld. DR reiterated the findings in the order.
6. On a careful consideration of the submission, we notice that there are no grounds made out by the appellants on merits. The new unit had only filed a declaration form. There was no factory existing in their name. The same factory of the appellants continued to functions and the Sales Invoices were raised in the appellant's name. Therefore, it cannot be said that factory was leased to the new firm and the new firm was merely misusing the Registration certificate and there was no flow back. The Commissioner has discussed the issue in detail and in identical situation, Tribunal had rejected similar contentions as noted by the Commissioner in Supreme Engineering Works [1996 (82) ELT 102] and Ganapati Mechanical Products (Order No. 674/96). In view of these findings recorded by the Commissioner on merits and the same being in terms of law, we do not wish to interfere with the same on merits and uphold the same.
7. However, as regards the plea of time bar, we notice that Larger Bench in the case of Nizam Sugars Ltd. (supra) had clearly held that where there is suppression or information withheld or any other fresh facts leading to extension of larger period, coming to light, then under proviso to Section 11A of the Act, show cause notice can be issued within a period of 5 years. In that view of the matter, we reject the appellant's contention that the demands are time barred.
8. As regards the claim that the show cause notice raised a demand for Rs. 62,101/- and the correct demand will be only Rs. 41,811/-, we find lot of force in this submission. The Commissioner cannot enhance the duty liability from the one raised in the show cause notice. On a perusal of the show cause notice, we notice that the demands raised was Rs. 62,101/- (BED= 54001/- + SED = 8100/-) as per Annexure A to the show cause notice. While the amounts confirmed is more than Rs. 4,07,372/- and penalty imposed is Rs. 50,000/-. In view of the basic error in the amounts confirmed compared to the demands raised in the show cause notice, the matter has to go back to the Commissioner of re-determining the correct amounts in terms of the show cause notice and grant the abatement on the assessable value treating the invoice as Cum-duty price. The appellants shall be heard on this matter and after due arrival of the correct duty figure, the penalty may be re-determined in the matter. Thus the appeal of the appellant is allowed by remand only on this limited ground. In the result, the Revenue appeal is dismissed and the appellants' appeal succeed partially by remand for re-determining the duty and penalty in the matter.
(Pronounced in open Court on 04.05.2001)