Custom, Excise & Service Tax Tribunal
M/S Bajaj Auto Ltd vs Commissioner Of Central Excise, ... on 29 April, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT AHMEDABAD COURT NO. II Appeals No. E/1817, 1879, 2142 & 2143/02 (Arising out of Order-in-Original No. 12/CEX/2002 dated 31.3.2002/ 18.4.2002 passed by the Commissioner of Central Excise & Customs, Aurangabad). For approval and signature: Honble Shri B.S.V. Murthy, Member (Technical Honble Shri Ashok Jindal, 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 : Yes 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? ====================================================== M/s Bajaj Auto Ltd. Shri Ranjit Gupta Shri Anurag Naresh Chandra M/s Anurag Engg. Co. Ltd. Appellants Vs. Commissioner of Central Excise, Aurangabad Respondent Appearance: Shri A. Hidayatullah, Shri M.P. S. Joshi, Sr. Advocate with Advocate for Appellants Shri V.K. Singh SDR for Respondent CORAM: SHRI B.S.V. MURTHY, MEMBER (TECHNICAL) SHRI ASHOK JINDAL, MEMBER (JUDICIAL) Date of Hearing: 12.04.2011 Date of Decision: .04.2011 ORDER NO. WZB/MUM/2011 Per: Ashok Jindal These appeals are listed before us on remand by the Hon'ble Supreme Court.
2. The appeals were disposed of by this Tribunal vide Order dated 13.1.2006, which was appealed by the Revenue before the Hon'ble Supreme Court and the Apex Court vide judgment dated 12.11.2010 remanded the matter for fresh consideration of all the issues raised by both the parties. Therefore, these appeals are listed before us today for final hearing.
3. The issue in this matter relates to the valuation of Aluminium Castings manufactured by M/s Anurag Engg. Co. Ltd (in short AECL), which in turn is based on purchase price of Aluminium Ingots supplied by M/s Bajaj Auto Ltd. (in short BAL). M/s AECL are engaged in manufacturing of Aluminium castings commonly known as Handle Bar Body, crank case clutch and casting used as motor vehicle parts classifiable under sub-heading 8708.00 and 8714.00 of the Central Excise Tariff Act, 1985. M/s BAL was supplying the inputs (Aluminium Ingots) after purchasing the same from other manufacturers to AECL for the relevant period under the cover of invoices issued under Rule 57F(2) and Rule 57F(3) of the Central Excise Rules, 1944 after reversing the MODVAT credit availed on the said inputs.
4. A show-cause notice dated 5.3.2001 was issued by the Commissioner of Central Excise, Aurangabad, wherein it was alleged that AECL was receiving inputs from BAL which under-valued the landed cost by not including expenses on account of Sales Tax, freight, insurance, loading/unloading charges and handling charges and that BAL was charging only the basic price of such inputs equal to basic price charged by the original manufacturer of the said inputs to BAL. Since the additional cost of loading/unloading, freight, insurance etc. were not included in the inputs supplied to AECL, there was consequential reduction in landed cost of such inputs. It was also alleged that the price charged by BAL was depressed prices although the same was coloured as negotiated prices and the prices indicated in the purchase order was in fact influenced by the supply of inputs by BAL at a lower landed cost and by this manner, BAL has compensated the AECL for depressed prices of AECLs finished goods supplied to BAL. Thus, both of them were aiding each other for mutual business interest so that the production cost of each others is kept at minimum and the Central Excise duty is discharged at lower value. Therefore, the adjudicating authority was of the view that price charged in Central Excise invoices by AECL for their finished goods was not the sole consideration for sale since the proportionate landed cost charged less by BAL, which is an additional consideration under Rule 5 of the Central Excise (Valuation) Rules, 1975. Hence, the expenses incurred by BAL in addition to the price, were required to be loaded in the assessable value for the payment of Central Excise duty. Under these circumstances, the show-cause notice was issued as to why the differential duty of Rs.27,71,594/- effected during the period w.e.f. 02.6.1998 to 30.9.1999 should not be recovered under proviso to Section 11A(1) of the Central Excise Act, 1944 read with Rule 5 of the Central Excise (Valuation) Rules, 1975 and why penalty under Section 11AC and interest under Section 11AB should not be levied and recovered. The notice also proposed imposition of penalty under Rule 209A of Central Excise Rules, 1944 on BAL, Shri Ranjit Gupta, Vice-President and Shri Anurag Naresh Chandra, Director of AECL. The same was adjudicated and demanded were confirmed along with interest against AECL and penalties on the co-noticees. Aggrieved from the said order, the appellants are before us.
5. Shri Arshad Hidayatullah, learned Sr. Advocate appeared on behalf of the appellants and submitted that the allegations made in the show-cause notice for under-valuation of Aluminium Ingots are baseless. He submitted that the price charged to M/s AECL by M/s BAL shown in the show-cause notice as Rs.69, 144/- per MT is not the correct value. In fact M/s BAL has cleared the Aluminium Ingots @ Rs.78.25 per kg as per the commercial invoice dated 21.9.1998. He further submitted that the show-cause notice is based on the Central Excise Gate Pass issued by M/s BAL on clearance of the said goods, which shows the reversal of CENVAT credit taken by BAL while clearing the goods to M/s AECL. In fact, against the said goods, the commercial invoices so issued by M/s BAL to M/s AECL is @Rs78.25 per kg and in the invoices, freight and Sales tax have been charged extra. Therefore, the allegation made in the show-cause notice is baseless. Therefore, the show-cause notice is not sustainable as the same is based on wrong facts and prayed that the impugned order is to be set aside.
6. On the other hand, the learned SDR submitted that as per invoices dated 21.9.1998, the commercial invoice was not supplied by the appellants to the investigating authority. Therefore, the investigating authority has arrived at the conclusion in the show-cause notice that the value has been suppressed by BAL while clearing the Aluminium Ingots to M/s AECL. Hence, the adjudicating authority has rightly confirmed the demand. Therefore, the impugned order is to be upheld.
7. Heard and considered.
8. This matter was finally heard by this Bench on 12.04.2011 and reserved for pronouncement of order on 29.4.2011. Both the parties sought time to file the written submission. On 27.4.2011, the learned DR filed his written submissions, which are also taken on record. In the written submissions, the learned DR submitted that with regard to the commercial invoice, he called a report from the Commissionerate and vide letter F.No. LC/Civil-46/2010 dated 25.4.2011, the Commissionerate has informed that: -
price of the goods under reference i.e. aluminum ingots as declared in the Central Excise invoice raised by M/s. Bajaj Auto Ltd. , to M/s. Anurag Engg. Co. Ltd. is Rs.69,144/- per MT, this fact has been admitted by Shri Ranjit Gupta , V ice President (materials) of M/s. Bajaj Auto Ltd, in his statement dated 16.08.1999 given before the investigating Office. The issue of raising of commercial invoice after issue of Central Excise Invoice by M./s. Bajaj Auto Ltd, was never disclosed by either M/s. Bajaj or M/s, Anurang Engineering to the department during investigating, which has been recorded by the adjudicating authority in Para 21 of the O-In-O dated 31.03.2002 . Further the calculations made by the department in the show cause notice was never challenged by claiming any benefit of any commercial Invoice whatsoever. Accordingly the calculations during the investigation /SCN was confirmed by the adjudicating authority.
3. In this statement dated 16.08.1999, Shri Ranjit Gupta. Vice President (materials) of M/s. Bajaj Auto Ltd, in response to a specific question, admitted to the fact of supply of raw materials to vendors at prices which were exclusive of the taxes and overheads. The relevant part of the statement are reproduced for appreciation in this regard.
Q No. 9:- Since this is negotiated price, is it correct that M/s. BAL is selling such items (excluding all taxes & other expenses) at which they were purchased by M/s. BAL?
Ans:- Price charged are fair market prices, in many cases we are selling at basic price excluding taxes & overheads, Prices are agreed prices. Further in his statement Shri Gupta did not made any reference to any commercial invoice. Being in charge and responsible for procurement of raw material and their sale, he would have mentioned such commercial invoices if it were in existence at time , in view of its sustained implication. In the aforesaid letter it has been further submitted that,-
4. It is also to point out that under the erstwhile Rule 52 A of the Central Excise Rules, 1944 which was operative during the material time, the assessee was required to furnish a certificate on the invoice indicating that the price shown in the invoice was correct and that there was no additional consideration directly or indirectly. Even the impugned Central Excise invoice Dt. 21.09.1998 is also containing such certification by M/s. Bajaj Auto,. Thus the certificate issued under the provisions of Central Excise Rules, 1994 as statutorily required , read with the depositions given by Shri Ranjit Gupta. Vice President of M/s Bajaj Ltd. Under Section 14 of the Central Excise Act 1944 (in this statement dated 16.08.1999) shows that the calculation made during the investigations/SCN were as per their own declaration. In case there was a commercial invoice with a different transaction value, as clamed by the Appellant it supported departments allegation of mis-declartion of relevant fact of the department, for which M/s. Bajaj Auto liable to be penalized.
5. Further production of Commercial invoice alone is not sufficient. The veracity of the Commercial invoice and the transaction value mentioned therein can be confirmed only on verification of ledger accounts maintained by M/s. Bajaj Auto for the transactions with M/s. Anurag Engineering, where it can be seen how much amount is credited / debited by M/s. Bajaj Auto on M/s. Anurag Engineering. As the Appellant has not produced the same, this fact can not be corroborated. It is to point out that as per the direction of Honble Supreme Court in the Judgment dated 12.11.2010 (Para12), the burden of proof in the case is on Appellant, which they failed to discharge.
9. Thereafter, we have gone through the case records also. After going through the case records, we find that during the course of personal hearing on 28.3.2002, the appellants have made submissions before the adjudicating authority thereafter the written submissions dated 29.3.2002 was filed in the office of the Commissioner on 2.4.2002 stating their defence in their case along with a copy of commercial invoices and all other relevant documents in support of their claim. We have also gone through the impugned order which was issued by the Commissioner on 18.4.2002 and the adjudicating authority did not consider the submissions of the appellants and the commercial invoices placed on record. In fact, the adjudicating authority in his order has asked the appellants to file a reply to the show-cause notice at the time of personal hearing but while passing the order, the Commissioner did not consider the written submissions of the appellants filed before him and the order was passed by ignoring the submissions. The submissions along with documentary evidences supporting the defence of the appellants were on record. But, when the learned SDR called for the report from the concerned Commissionerate, nothing was stated in the report dated 25.4.2011 in paragraph 5 above about the written submissions filed by the appellant, which are part of the record as the acknowledgement receipt has been placed by the appellants before us. Therefore, the report dated 25.4.2011 filed by the concerned Commissioner is not correct as per record. Hence, the same is rejected.
10. We further find that in the show-cause notice the allegation is that M/s BAL has cleared the Aluminium Ingots to M/s AECL at a price lower than the price on which M/s BAL has purchased the aluminium ingots from the suppliers. We have also seen the costing sheets in the SCN, which is reproduced herein as under: -
(a) Price charged to M/s. Bal for purchase of Aluminium Ingots from Original Mfrs. = Rs. 83,042/-
(b) Less discount = Rs. 500/- per M.T.
(c) Less Excise duty = Rs. 10,832/-
(d) Net Price ( a - b ) = Rs. 71,710/-
(e) Freight charges from M/s. Bal to M/s. AECL @ 1% = Rs. 717/-
(f) Loading/ unloading charges @ 5% = Rs. 3,585/-
(g) Profit of M/s. BAL @ 10% = Rs. 7,170/-
(h) Total Price of Alu. Ingots ( d + e + f + g ) = Rs. 83,182/-
(i) Price charged to M/s. AECL by M/s. BAL = Rs. 69,144/-
(j) Difference in price ( h i ) = Rs. 14,038/-
(k) Difference in percentage = 20% approx.
11. In the written submissions, the appellants have also filed an Invoice issued by National Aluminum Company Ltd. on the basis of which value of Rs.71.71 per kg was arrived at by the department and as per the Annexure-B of the written submission dated 2.4.2002, it was mentioned that the commercial invoice has been issued @ Rs.78.25 per kg shown wherein Sales Tax and freight are shown separately. Annexure-B of the written submissions is reproduced herein for better appreciation: -
CALCULATION OF COST OF ALUMINIUM ALLOY PURCHASED FROM NALCO INVOICE NO 357 DATED 14.09.1998 RELIED IN THE SHOW CAUSE NOTICE NO 12/CEX/2001 DATED 5.3.2001 AND YOUR LETTER DT 8.3.2002.
Particulars Qty.
Amount (Rs.) Price 9.624 MT 662131.00 Handling, Freight & Insurance charges 32818.00 Excise Duty 15% 104242.00 Sub-Total 799191.00 Less: Discount 4812.00 Net price paid to supplier 794379.00 Less: Cenvat credit availed 104242.00 Net value for 9.624 MT of Alu.Alloy 690137.00 Landed cost of Alu.alloy per MT 71709.00 Landed cost of Alu.alloy per Kg. I.e. 690137 *9264 Kg = 71.71 Details of Aluminium sold to M/s. Anurang Engineering.
Commercial Invoice No 5152 dated 25.9.1998 Qty 10022.00 Rate 78.25 per Kg Corresponding details of Invoice No. 45702 dated 21.9.1998 Issued under Rule 57F (3) for payment of duty.
Invoice No. 45702 dated 21.9.1998 Qty 10022.00 Rate 69143.83 total duty paid Rs. 98746.72
12. We have also gone through the Central Excise invoices dated 21.9.1998 on the basis of which, the valuation of aluminium ingots was calculated @ Rs.69.14/- per kg. In fact the Central Excise invoices showing the reversal of CENVAT credit availed by M/s BAL while clearing the goods as such to M/s AECL. The corresponding commercial invoice has been issued by M/s BAL, which shows the price @ Rs.78.25 per kg, the freight and Sales Tax have also been charged extra. Therefore, we find that the allegation in the show-cause notice is not based on the commercial invoice which is relevant for arriving at the costing of the finished goods cleared by M/s AECL. Therefore, we find that the show-cause notice has not been issued on the correct valuation of aluminium ingots cleared by M/s BAL to M/s AECL. Hence, charge of under-valuation of the aluminium ingots cleared by M/s BAL to M/s AECL is not sustainable. Therefore, the demands are also not sustainable. In facts of the case, the penalties imposed on the appellants are also not leviable.
13. In result, the impugned order is set aside and the appeals are allowed with consequential relief, if any.
(Pronounced in Court on ..)
(B.S.V. Murthy) (Ashok Jindal)
Member (Technical) Member (Judicial)
Vks/
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