Customs, Excise and Gold Tribunal - Calcutta
Tata Refractories Limited vs Commr. Of C. Ex. & Cus., Bhubaneswar on 22 January, 2002
Equivalent citations: 2002(141)ELT460(TRI-KOLKATA)
ORDER
S.S. Sekhon, Member (T).
1. (a) The Appellants, are manufacturers, inter alia, of Refractory Bricks falling under Chapter subheading No. 6901.00 of the Schedule to the Central Excise Tariff Act, 1985. One of the varieties of the Refractory Bricks manufactured by the appellant is Magnesia Carbon Refractory Bricks (hereinafter referred to as the "said goods"). Steel Authority of India Limited (SAIL) is one of the customers, who purchase the said goods from them by entering into contracts for supply to the units at Rourkela, Bhilai and Bokaro. Dead Burnt Sea Water Magnesite is a raw material for the manufacture of the said goods. This raw material had to be imported during the material period.
(b) One of the clauses, in the contracts/purchase orders, which was common to all the purchase orders/contracts, read as follows :-
"(3) Advance Licence : - SAIL, BSP will arrange to transfer Nil duty Advance Import Licence to you for the quantity of Magnesia Carbon bricks ordered on you on 1:1 basis for import of Dead Burnt Sea Water Magnesite required for supply of Mag-Carbon Bricks ordered. In case the Advance Licences are not transferred an amount of Rs. 6,500/- PMT will be paid extra in ex-work price mentioned in the A/T at the current rate of customs duty of 50%. However, in case customs duty is increased/decreased beyond the present-rate of 50%, the aforesaid amount of Rs. 6,500/- PMT will be adjusted on pro-rata basis to be paid for supplies to be effected from 1st of the month after two clear months from the month when the customs duty change announced by Government of India comes into effect."
(c) After enquiries, it was found that out of the total quantity of the refractory bricks dispatched to SAIL by the appellant, certain quantities were made out of raw material for which no such advance licences had been furnished to them by SAIL. Accordingly, the appellant had raised supplementary bills at the rate of Rs. 6,500/- PMT on 1997. 497 PMT of the goods and also had paid Central Excise duty of Rs. 25,96,746/- on such additional records vide PLA Entry No. 451, dated 25-8-1995 and 482, dated 30-8-1995,
(d) The Commissioner, however, vide his impugned order, confirmed the duty demanded of Rs. 47,81,123/- under Section 11A of the Central Excise Act read with Rule 9(2) and imposed a penalty on an equal amount only and not under Section 11AC of the Central Excise Act and ordered the recovery of interest under Section 11AB and passed the following order.
(e) The present appeal is against this order for the duty demanded for the period 1-3-1994 to 7-2-1995 vide Show cause notice dated 11-3-1998.
2. We have heard both sides and considered the submissions, and find :-
(a) That the Commissioner has considered the question of the invocation of the larger period under proviso to Section 11A and has come to a conclusion as follows:-
"9.2 On examining the above contentions, it is noticed from the admission made by them themselves in their own reply that the RT 12 returns had been assessed by the Range Officer until January, 1992 only. The period covered by the show cause notice is however from 30th March, 1994 to 7th February, 1995. Since, as per the assessee themselves, the RT 12 returns had been assessed until January, 1992 only, it is inconceivable how the assessee considered it logical and appropriate to advance and stress upon the contention that had they not submitted the relevant purchase orders along with the RT 12s the Range Officer would have raised objections and since no such objection exists it must be presumed that the relevant purchase orders were duly submitted. Their argument is clearly illogical. If the RT 12 returns had been assessed upto January, 1992 only, as stated by them, the question of raising objections in relation to assessment of RT 12 returns pertaining to the period from March, 1994 to February, 1995 could not have at all arisen. The fact however is that no objection regarding incorrect determination of value and payment of duty was raised by the Range Officer since, as confirmed by the jurisdictional officers even during the course of adjudication proceedings and as brought to the notice of the assessee during the course of Personal Hearing, the assessee did not submit any contract papers/purchase orders/licences etc., along with RT 12 returns to the Range Officer.
9.3 Notwithstanding the inconsistencies, contradictions and illogicality of the aforementioned contentions of the assessee, the fact of the matter is that the referred permission under Rule 173C(11) and the conditions attached thereto by Collector, Central Excise, Bhubaneswar for enabling the assessee to avail the relaxations under the said rule, was no longer operative during the period covered by the show cause notice i.e., from March 1994 to February 1995. The assessee's reliance upon the permission granted more than six years earlier than March 1994 under Rule 173C(11), the conditions attached to the said conditions, are entirely misconceived, misplaced and factually unsubstantiated. While advancing such contentions, the assessee have conveniently, apparently with due deliberation, disregarded the fact that Rule 173C and deletion of Rule 173C(11) with effect from 1-3-94, the permission granted by the Collector, Central Excise, Bhubaneswar in October 1987 under Rule 173C(11), as then existing, automatically lapsed.
9.4 With effect from 1st March 1994, the assessee were required to comply with procedures and conditions as introduced under the amended provisions of Rule 173C In terms of these provisions, the assessee were required to declare the value of the goods under Section 4 of the Act on invoices, GP 1s, used by them for sale or removal of goods. The amended provisions of Rule 173C did not as such require the assessee to submit contract documents/purchase orders etc. along with the monthly RT 12 return. However, Sub-rule (2) of Rule 173C now required the assessee to certify on each invoice/ GP 1 "that the amount indicated in such document represents the price actually charged by him and that there is no additional consideration flowing directly or indirectly from such sales over and above what has been declared." Thus, with the liberalization introduced under the amended provisions of Rule 173C the invoice value procedure was made the principal procedure for valuation of the goods. However, a statutory obligation was simultaneously created by placing the onus upon the assessee to ensure that the value of goods declared on invoices/ GP 1s actually represented the value in terms of provisions of Section 4 of the Act and, more particularly, no additional consideration flows either directly or indirectly from such sales.
9.5 The assessee in their reply to the Show Cause Notice have made only a general denial to the allegation that they violated the provisions of Rule 173C and other Rules. They have failed to establish, rather made no worthwhile attempt to establish, that they fully complied with the new procedures as introduced under the amended provisions of Rule 173C with effect from 1-3-94, and that they discharged the statutory obligation of not merely certifying but also ensuring that there existed no consideration, in addition to the sale price declared on invoices/ GP 1s. Instead the assessee have in their defence submissions unduly stressed upon adherence to the procedure and conditions imposed in terms of permission granted by the department more than six years earlier under provisions of then existing Rule 173C(11). As discussed above, the assessee have failed to produce any kind of substantiating evidence, documentary or otherwise, to establish that they had diligently complied with the conditions of invoice value procedure allowed to them under Rule 173C(11) in relation to clearances effected after 1st March, 1994 and that they had submitted the relevant contract/purchase orders along with the RT 12 returns or otherwise to the Range Officer, as claimed by them.
. 9.6 In the circumstances, the conclusion is inescapable that the assessee violated the provisions of Rule 173C, and consequently the other related provisions which obliged them to determine and pay duty correctly, and further that they deliberately suppressed facts and made wilful mis-statements (on invoices etc.) by with-holding material information and documents containing such information from the departmental officers. They felt constrained to disclose such information and documents only after the departmental officers undertook detailed probe to examine and verify the correctness of the value of goods declared by them on clearance and assessment documents. Hence, the assessee's contentions that they had voluntarily disclosed all relevant information and documents even prior to initiating of such probe and that the departmental officers had full knowledge and custody of such information and documents, are entirely incorrect and rejected accordingly."
And we find, in the facts of this case, the decision as arrived by the Commissioner, to invoke the larger period of the proviso clause and extracted herein above are valid and we do not find any infirmity in this regard.
(b) We find that the Commissioner, has rightly come to the conclusion regarding the fact of additional monetary consideration in addition to price being paid for the goods i.e., transfer of advance import licence in favour of the seller by the buyer enabling the seller of the goods to effect duty free import of the raw materials and bring down the cost of production/ procurement is a consideration, the monetary value of which has to be considered under the provisions of the Central Excise (Valuation) Rules, i.e., Rule 5 of Central Excise (Valuation) Rules, 1975.
(c) Whether this addition proposed, should constitute the differential assessable value for calculating the duty or the same should be treated as differential price which would be inclusive of duty element involved is required to be decided. Since in the case of CCE v. V.S.T. Industries - 1991 (52) E.L.T. 59 at Para 25 of the reported decision in the case of Hindustan Polymers - 1989 (43) E.L.T. 165 (S.C.) Para 12 thereof the Bench held : -
"25. The language of Section 4 and the extract of the Supreme Court is judgment reproduced above show that the interpretation as given by the Supreme Court above is the correct one. Rule 5 of Valuation Rules and Section 4 of the Act, have to be read together. A harmonious construction can lead only to one conclusion that the extra accrual should be added to the wholesale price and the assessable value worked back after allowing admissible deductions. Addition of such extra accruals to the assessable value would distort the meaning of the Section because there is no way in which abatement of excise duty which is permitted by Section 4 can be given if the extra accrual is directly added to the assessable value.
This view is best illustrated by taking instances where the rate of excise duty is 100% and say 150%. If the extra accrual is Rs. 100 and it is added to the assessable value the entire accrual is to be paid as excise duty when the duty is 100%. If the duty is 150% the assessee ha/to pay, in case of extra accrual of Rs. 100/- an amount of Rs. 150/- as excise duty. Excise duty is not a confiscatory tax and therefore, whatever accrual is there to the assessee only a part of it, major or minor according to the rate of duty, would have to be paid as excise duty. This would be achieved only if the extra accrual is added to the price and not if it is added to the assessable value."
We would also consider that "EXCISE DUTY" to be a cut or a share, only from the 'produces proceeds' and not an additional burden. The same concept has been approved by the Larger Bench in the case of Srichakra Tyres Ltd. - 1999 (108) E.L.T. 361 (T.-LB) = 1999 (32) RLT 1 (CEGAT). We would Consider Rule 5 would require the determination of monetary considerations to be addable to the assessable value and do not approve additions of Rs. 6,500/- PMT as arrived at, which are gross additional receipts in this case to be added to assessable value without any supporting findings. The consideration, for the additions by reduction of duty element, is thus required to be redone. While determining as above, we take note that Revenue's appeal in V.S.T. decision [1991 (52) E.L.T. 59] has been dismissed by the Supreme Court [1997 (90) E.L.T. A58] and the appeal of M/s. V.S.T. Industries on this regard, was allowed by the Supreme Court [1998 (97) E.L.T. 395 (S.C)], and they came to the conclusion that Rule 5 of the Valuation Rules was not applicable in the facts of that case, after recording in Para 7 of the decision.
"7. The excise authorities then filed appeals against the deletion of the notional interest from the assessable value. The Tribunal allowed the departments appeal holding that notional interest charges should be considered for arriving at the assessable value of cigarettes but such extra commercial consideration should be added to price and not assessable value. It is against this decision of the Tribunal that the present appeals have been filed."
From the above, it appears that the Hon'ble Supreme Court's rejection of Revenue's appeal and allowing the appeal of M/s. V.S.T. Industries has not disapproved the logic and the finding arrived at in Para 25 of the Tribunal's order in [1991 (52) E.L.T. 59], following the same logic and findings and bound by Larger Bench decision [1999 (108) E.L.T. 361 (Tri.-LB) = 1999 (32) RLT 1], we would order that the quantum of consideration should be reworked and duty amounts redetermined.
(d) We find that the appellants had paid certain amounts even before the notices of duty demand were issued. The said payments should be considered while working out the revised demand of duty and thereafter the penalty, if any to be imposed should be determined.
3. In view of our findings, we set aside the order and remand the matter for de novo adjudication .