Custom, Excise & Service Tax Tribunal
Bharat Automotive Pressings (India) ... vs The Commissioner Of Central Excise on 4 August, 2010
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No.I APPEAL No.E/1795/03 (Arising out of Order-in-Appeal No.P-I/81/2003 dated 11/03/2003 passed by Commissioner of Central Excise (Appeals), Pune) For approval and signature: Honble Mr.P.G.Chacko, Member (Judicial) Honble Mr.S.K. Gaule, Member (Technical) ====================================================
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?
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Bharat Automotive Pressings (India) Pvt Ltd., Appellants
Vs.
The Commissioner of Central Excise,
Pune Respondents
Appearance:
Shri.Vishwanath, Advocate for the Appellants
Shri.K. Lal, SDR for the Respondents
CORAM:
Mr.P.G. Chacko, Member (Judicial)
Mr.S.K. Gaule, Member (Technical)
Date of hearing : 04/08/2010
Date of decision : 04/08/2010
O R D E R No:..
Per: P.G. Chacko
1. In this appeal filed by the assessee, the challenge is against demand of duty of Rs.1,15,238.74 for the period from March 1994 to January 1999, demand of interest thereon under Section 11AB of the Central Excise Act, and the penalty of Rs.76,339/- imposed on the appellant under Section 11AC of the Act. The appellant has challenged the demand of duty both on merits and on the ground of limitation. However, at this stage, the ld. Counsel for the appellant submits that the challenge against the demand of duty on merits is not being pressed in view of the settled position of law that the amortized value of moulds and dies supplied free of cost by the buyer is liable to be included in the assessable value of the final products manufactured by making use of such moulds and dies. In this connection, the ld. Counsel has fairly invited our attention to the decision of the Tribunals Larger Bench in Mutual Industries Ltd., Vs. CCE, 2000 (117) ELT 578 (Tri-LB). The ld. Counsel however submits that the appellant has a strong case against the above demand of duty on the ground of limitation. The ld. SDR has contested this claim. Both sides have referred to the facts of the case as well as to case law in support of their respective submissions.
2. The show-cause notice in this case was issued on 26/03/99 demanding differential duty to the extent of Rs.2,96,764/- from the appellant in respect of the final products cleared by them, during the aforesaid period, to M/s.Telco Ltd. These goods were manufactured by the appellant by making use of moulds supplied free of cost by M/s.Telco Ltd. The show-cause notice alleged that the value of the moulds/dies which were supplied free of cost by the buyer for the purpose of manufacture of the subject goods was liable to be included in the assessable value of these goods, which were cleared to M/s.Telco. The notice invoked the extended period of limitation on the alleged ground of suppression of relevant facts by the noticee with intention to evade duty. On the same ground, the notice sought to levy interest on duty under Section 11AB as also to impose a penalty on the noticee under Section 11AC. These proposals were contested by the party. In adjudication of the dispute, the original authority amortized the value of moulds and included the same in the assessable value of the subject goods and accordingly confirmed the demand of duty of Rs.1,15,238.74 against the appellant. It ordered for levy of interest under Section 11AB and also imposed a penalty on the party under Section 11AC. The appeal preferred to the Commissioner (Appeals) against the order of adjudication was rejected. Hence the present appeal of the assessee against the appellate Commissioners order. The challenge to the demand of duty, at this stage, is solely on the ground of limitation. The ld. Counsel has argued that the appellant did not suppress any fact before the department with intent to evade payment of duty. There was no reason for such suppression as, according to the appellants understanding of the provisions of Section 4 of Central Excise Act, they were not liable to include the value of the moulds or any part thereof in the assessable value of the final products cleared to Telco. It is further submitted that, during the material period, there was confusion as to whether the value of moulds and dies was to be included in the assessable value of excisable goods manufactured by making use of such moulds/dies supplied free of cost by the buyer. It is submitted that there were conflicting decisions of co-ordinate benches of this Tribunal on the above question and that conflict was finally resolved by a Larger Bench as late as in 2000 only. In this connection, the ld. Counsel has once again referred to Mutual Industries Ltd (supra). The ld. Counsel has also submitted that, in several cases, this Tribunal took note of the above circumstances and held in favour of the assessee on the question of limitation in cases where differential amounts of duty were demanded from them on the basis of inclusion of cost of moulds/dies in the assessable value of excisable goods for extended periods beyond the normal period of limitation prescribed under Section 11A of the Act. In this context, reference is made to Bright Brothers Ltd., Vs. CC, Mumbai-III (2004 (61) RLT 679 (CESTAT-Mum) and Star Glass Works Vs. CCE, Mumbai (2003 (162) ELT 367 (Tri-Mumbai). The ld. Counsel has also raised the plea of revenue neutrality against invocation of extended period of limitation. It is submitted that whatever duty is paid by the appellant is available as MODVAT credit to the buyer and, therefore, there can be no loss to the Revenue. In the circumstances, according to the Counsel, it cannot be said that the appellant had any intention to evade payment of duty.
3. The ld. SDR has, at the out set, submitted that the plea of revenue neutrality cannot be raised unless the benefit of MODVAT credit referred to by the Counsel would accrue to the assessee themselves. In this connection, he has relied on Jay Yuhshin Ltd., Vs. CCE, New Delhi (2000 (119) ELT 718 (Tribunal-LB), wherein it had been held as under:
With particular reference to Modvat scheme (which has occasioned this reference) it has to be shown that the Revenue neutral situation comes about in relation to the credit available to the assessee himself and not by way of availability of credit to the buyer of the assessees manufactured goods.
4. Referring to other arguments of the Counsel, the ld. SDR submits that, even after the Tribunals decision in Flex Industries Ltd., CCE (1997 (91) ELT 120 (Tribunal), which was in favour of inclusion of amortized cost of moulds/dies in the assessable value of the excisable goods, the appellant continued to exclude such cost of moulds (supplied free of cost by Telco) from the assessable value of the finished goods supplied to Telco. It was only after the period of dispute that another bench of this Tribunal took a different view and, therefore, there was no reason for the appellant to be confused between 1997 and January 1999. It has also been submitted that the appellant did not disclose the relevant fact in the RT-12 returns filed during the period of dispute, nor did they disclose it to the departmental auditors, who visited the factory for test audit. According to ld. SDR, in these circumstances, the appellant should be held to have suppressed the relevant fact with intent to evade payment of duty and accordingly their plea of limitation should be rejected.
5. We have considered these submissions also. Though we are not impressed with the submissions relating to the test audit, we are not in a position to ignore the submission of the ld. SDR that the appellant continued to exclude the amortized cost of moulds from the assessable value of the goods supplied to Telco even after the Tribunals decision in Flex Industries case (1997), which was to the effect that such cost was liable to be included in the assessable value of the goods. A contra decision of the Tribunal came, admittedly, after January 1999. Having made an endeavour to derive benefit out of the so-called confusion arising out of conflicting decisions of the Tribunal, the appellant cannot turn around and say that they were not aware of the Tribunals decision in Flex Industries case. The facts and circumstances of this case are explicit enough for us to hold that the appellant deliberately excluded the amortized cost of moulds (supplied free of cost by Telco) the assessable value of the excisable goods supplied to Telco (buyer), even after Tribunals decision (1997) in Flex Industries case, which was in favour of the Revenue. It appears to us that this context of the appellant was wilful with intent to evade payment of appropriate duty on the goods in question. For the period prior to 1997, the appellant seems to be in a position to claim support from the view taken in Bright Brothers Ltd. case (supra) and Star Glass Works case (supra).
6. We also find a valid point in the submission of the ld. SDR that the demand of duty for the extended period cannot be resisted by the appellants on the premise that whatever duty paid by them would ultimately be available as MODVAT/CENVAT credit to the buyer. The submission of the ld. SDR is well-founded vide Jay Yuhshin Ltd. (supra).
7. In the result, we hold that the demand of duty for the period from 1997-98 to 31/01/99 is not hit by time-bar and that the demand of duty for the prior period is time-barred. In this view of the matter, obviously, the amount of interest on duty under Section 11AB and amount of penalty under Section 11AC require to be re-quantified by the original authority. For this limited purpose, we remand the matter to the original authority, which shall pass a speaking order after giving the assessee a reasonable opportunity of being heard.
(Dictated in Court) (S.K. Gaule) Member (Technical) (P.G.Chacko) Member (Judicial) pj 1 7 2