Custom, Excise & Service Tax Tribunal
M/S.Indian Sugar & General Engineering vs Cce, Panchkula on 18 July, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
DIVISION BENCH
Court No.2
Date of Hearing/Decision:18.07.2013
Excise Appeal No.E/165/2008-Ex
(Arising out of OIA No.463/KKG/PCK/2007 dated 24.10.2008 passed by CCE (A), Delhi-III, Gurgaon)
M/s.Indian Sugar & General Engineering Appellant
Corporation
Vs.
CCE, Panchkula Respondent
And Excise Appeal No.E/2587/2009-Ex (Arising out of OIA No.131/ANS/PCK/2009 dated 15.5..2009 passed by CCE (A), Delhi-III, Gurgaon) M/s.Indian Sugar & General Engineering Appellant Corporation Vs. CCE, Panchkula Respondent Excise Appeal No.E/2588/2009-Ex (Arising out of OIA No.130/ANS/PCK/2009 dated 15.5..2009 passed by CCE (A), Delhi-III, Gurgaon) M/s.Indian Sugar & General Engineering Appellant Corporation Vs. CCE, Panchkula Respondent Excise Appeal No.E/2603/2009-Ex (Arising out of OIA No.127/ANS/PCK/2009 dated 13.5.2009 passed by CCE (A), Delhi-III, Gurgaon) M/s.Indian Sugar & General Engineering Appellant Corporation Vs. CCE, Panchkula Respondent Excise Appeal No.E/2256/2012-Ex (Arising out of OIA No.193/BK/PKL/2009 dated 30.4.2012 passed by CCE (A), Delhi-III, Gurgaon) M/s.Indian Sugar & General Engineering Appellant Corporation Vs. CCE, Panchkula Respondent Present for the Assessees: Mr.B.L.Narsimhan, Advocate Present for the Revenue: Shri V.P.Batra, DR Excise Appeal No.E/2136-2141/2011-Ex (Arising out of OIA No.224-229/CE/D-II/2011 dated 9.5.2011 passed by CCE(A), Delhi-II, New Delhi) CCE, Panchkula Appellant Vs. M/s.Indian Sugar & General Engineering Respondent Present for the Revenue: Shri V.P.Batra, DR Present for the Assessees: Shri B.L.Narsimhan, Advocate Coram: Honble Mr.D.N.Panda, Judicial Member Honble Mr.Manmohan Singh, Technical Member FINAL ORDER NO.57182-57192/2013 PER: D.N.PANDA All the Assessees in appeals listed at Sr.No.29 to 32 and 39 of the cause list and Revenue appeals in Sl.No.33 to 38 of cause list as per chart depicted below having common cause of action are heard analogous and disposed by this common order:
Particulars S. No. Of Cause list Appeal No SCN dated Period Duty Penalty M/s.Indian Sugar & General Engineering Vs.CCE, Panchkula 29 E/165/08
02.05.2006 01.04.2005 to 30.09.2005 7,90,394 7,90,394 M/s.Indian Sugar & General Engineering Vs.CCE, Panchkula 30 E/2587/09 30.04.2007 01.04.2006 to 30.09.2006 2,21,836 2,21,836 M/s.Indian Sugar & General Engineering Vs.CCE, Panchkula 31 E/2588/09 16.05.2008 01.04.2007 to 30.09.2007 4,31,602 4,31,602 M/s.Indian Sugar & General Engineering Vs.CCE, Panchkula 32 E/2603/09 01.11.2007 01.10.2006 to 31.03.3007 3,15,281 3,15,281/-
CCE, Panchkula vs.M/s.Indian Sugar & General Engineering 33 E/2136/11 06.11.2009 01.10.2008 to 30.03.2009 13,65,114 1,00,000 CCE, Panchkula vs.M/s.Indian Sugar & General Engineering 34 E/2137/11 07.07.2009 01.06.2008 to 31.12.2008 11,74,562 1,00,000 CCE, Panchkula vs.M/s.Indian Sugar & General Engineering 35 E/2138/11 26.05.2010 01.08.2009 to 31.12.2009 4,94,707 1,00,000 CCE, Panchkula vs.M/s.Indian Sugar & General Engineering 36 E/2139/11 06.05.2010 01.04.2009 to 31.07.2009 3,30,973 50,000 CCE, Panchkula vs.M/s.Indian Sugar & General Engineering 37 E/2140/11 28.12.2010 01.04.2010 to 30.06.2010 2,07,512 50,000 CCE, Panchkula vs.M/s.Indian Sugar & General Engineering 38 E/2141/11 31.03.2009 01.03.2008 to 31.03.2008 1,83,936 1,83,936 M/s.Indian Sugar & General Engineering Vs.CCE, Panchkula 39 E/2256/12 30.11.2010 01.01.2010 to 31.03.2010 4,46,107 90,000
2. Learned Counsel appearing on behalf of assessees submit that actual cost of transportation incurred for delivery of the goods at door step of buyers was included in the assessable value since transportation of goods was undertaken by the appellants. Average transportation cost is normally billed and after incurring the cost of transport where the cost is incurred is over and above average cost billed earlier, difference thereof is further billed and included in the assessable value. Where average cost collected is more than actual cost incurred, the adjudicating authority confirmed the tax demand. Adjudication so made was upheld in the order in appeal by ld.appellate authority below in all five cases.
3. Entire evidence relating to contracts were provided at the adjudication stage which show elaborate averments made pleading that in many cases the assessee had incurred more expenses on account of freight than the actually recovered from the customers. It was argued alternatively that if the department decides the levy of duty on differential freight the excess realization should be set off against differential short recovery of freight from the customers. Despite such a clear submission, ld.adjudicating authority did not turn up to examine the issue. Only an abrupt conclusion was drawn to hold that any freight collected over and above actual cost incurred shall be liable to duty with an observation that the same shall form part of the assessable value.
4. According to the assessee, while aforesaid proposal was in the above five appeals reverse is the decision by ld. Commissioner (Appeals) in the appeals listed at Sr.No.33 to 38 of the cause list filed by the Revenue as depicted above. Ld. Commissioner (Appeals) while reaching to his conclusion has categorically held that charge of undervaluation is a serious charge and which can be sustained only on the basis of tangible and cogent evidence. While holding so, he also noticed that the assessee had paid service tax on the amount recovered as transport charges. He did not find any undervaluation of the goods for which the amount recovered in the guise of transportation charges as alleged by the department was held by him to be profit and not liable to be included in the assessable value. This conclusion is also wrong.
5. On the above proposal, prayer of the appellants is to allow the appeals at Sr.No.29 to 32 and 39 of the cause list. So also the appeals appearing at Sr.No.33 to 38 of the cause list above should be rejected.
6. On the other hand argument of the Revenue is that the assessee did not provide actual cost incurred in respect of each and every clearances for which Revenue was of the view that excess realization of disguised consideration of sale as transportation charges was additional consideration to form part of the assessable value and the assessee cannot take average cost concept stand without providing the details.
7. Heard both sides and perused the records.
8. We appreciate Revenues stand that transportation cost incurred in respect of each and every clearance indeed need disclosure for addition to the assessable value. But what that is essential at this stage is to ascertain whether there was any undervaluation alleged in respect of each and every clearance. That does not come out anywhere. Duty is payable in respect of each and every clearances and transportation cost necessary for making delivery under the term FOR destination is necessarily to be included in the assessable value without any average calculation method when such average cost of transportation is not permissible under law. What that is permissible in the law is that actual cost incurred for the delivery at the buyers point is necessarily to be included in the assessable value. Such clear and distinct exercise has not been done in respect of each and every clearance.
9. It is noticed that the appellant has made several averments in its defence reply. But ld.Adjudicaitng authority did not focus his attention on the substance of allegation. He went by his consideration that extra consideration of transport being profit should form part of the assessable value. His decision is not based on the cogent evidence and material fact in respect of each and every clearance. It is not possible to approve his decision which is not made on elaborate exercise in respect of each and every clearance to determine whether in the guise of transportation charges the assessee had received undervalued consideration of the goods without any cogent evidence on record. Accordingly, the assessee should succeed.
10. Profit accrued from transportation charges adopting average cost process is not determining factor while actual cost incurred in respect of each consignment under consideration needed testing to make an allegation of undervaluation.
11. It is noticed that while deciding the appeals of the assessee learned Commissioner has made observation that whatever transportation charges was paid that has suffered service tax. When this was available on records and service tax being levied on transportation cost from 2006 onwards, learned adjudicating authority should have considered that aspect to examine assessable value. But that was also not done. In view of difficulties expressed above and findings made, it is not possible to hold in favour of Revenue.
12. Revenues anxiety for remand could have been appreciated had the appeals not been eight years old. In view of the time factor involved and observation made above re-adjudication exercise may not be productive.
13. In result all the appeals of the assessee are allowed and Revenues appeals are dismissed.
(dictated and pronounced in the court) (D.N.PANDA) JUDICIAL MEMBER (MANMOHAN SINGH) TECHNICAL MEMBER mk 5 1