Customs, Excise and Gold Tribunal - Bangalore
Commissioner Of Central Excise vs Itw Signode (India) Ltd. on 17 August, 2004
Equivalent citations: 2005(99)ECC197, 2005(179)ELT120(TRI-BANG)
ORDER S.L. Peeran, Member (J)
1. The Revenue is challenging the correctness of the Order-in-Appeal No. 60/03, dated 17-7-2003 by which the Commissioner (Appeals) has held that the cost of the tooling/moulding charges collected from the customer is not required to be added in the value of the irathane products and rollers coated with irathane.
2. We have heard both sides in the matter and have considered the submissions made by them both oral as well as in writing.
3. We notice that in so far as the merits of the case is concerned, the is sue is decided against the assessee in terms of the Larger Bench judgement rendered in the case of Mutual Industries Ltd. v. CCE [2000 (117) E.L.T. 578]. The Larger Bench has taken the view that the cost of the moulds are required to be added in the value of the finished products and hence the assessee was required to have added the value of the cost of the tooling/moulding charges collected from the customers.
4. The ld. Counsel for the assessee has taken an argument that the demands are barred by time on the ground that they had filed the classification list with regard to the manufacture of moulds and had also collected the duty in respect of the cost of the moulds from the party in respect of moulds manufactured by them. It is their submission that even in respect of imported moulds its value had been added in the assessable value of the final product. His contention is [hat during the relevant period there were conflicting decisions on the merit of the case and therefore the appellants held a bonafide belief with regard to the cost of the moulds not to be added in the value of the final product and it is pointed out that the issue is covered in their favour on demands being hit by time bar as held by the Tribunal in the case of Paradise Plastic Enterprises Ltd. v. CCE = 2004 (92) ECC 357]. It has been noted by the President's Bench in respect of the same issue that there cannot be suppression of facts on the part of the assessee nor an intention to evade payment of duty and there were conflicting judgments on this very item of amortisation of cost of moulds. It is pointed out by the ld. Counsel that the Apex Court in the case of Amco Batteries ltd. v. CCE [2003 (153) E.L.T. 7 (S.C.) = 2003 (55) RLT 272 (SC)] has clearly held that when the entire movement of goods and receipts of the same manufactured by the job workers is recorded in regular books of account and proper documentation is maintained in form of delivery challan, then there was no reason for the assessee to suppress as they were entitled to have the facility of Modvat scheme and in that circumstance it would be difficult to hold that there is any wilful suppression on the part of the assessee which would empower the authorities to invoke the extended period of limitation under proviso Section 11A of the Act. The Apex Court has applied its earlier ruling rendered in the case of Padmini Products v. CCE =1989 (4) SCC 275]. It is his submission that even if they had collected the cost of the moulds from the customers then the customer would have been entitled for the Modvat benefit and hence there was no question of appellants suppressing the facts to defraud the Revenue. He submits that this Apex Court judgment in an identical case was applied by this Bench in the case of Creative Micro Systems v. CCE, Bangalore [Final Order No. 1261/2004, dated 23-7-2004].
5. Ld. SDR strenuously argued the matter and contended that the period in question was 1994-97 and the dissenting order of Tribunal on non-inclusion of the cost of moulds came in 1999 and therefore it cannot be a ground to hold that there was no suppression in the matter. He submitted that the appellants were bound to have added the cost of the moulds in the assessable value of the final product and the same has not been done. Hence, the larger period was invokable including imposition of penalty. He contended that in so far as the merits of the case is concerned, the issue is covered by the Larger Bench judgment rendered in the case of Mutual Industries Ltd. (supra).
6. On our careful consideration, we notice that the issue on merits is covered against the assessee as rendered by the Larger Bench in the case of Mutual Industries Ltd. Therefore, we hold that the assessee was required to have included the cost of the tooling/moulding charges collected from the customers while realising the same separately in the commercial invoice. We are now required to consider as to whether the larger period can be invoked in the present case.
7. We have considered the judgements cited by the ld. Counsel. How ever, we are required to apply the ratio of the judgment rendered in the case of Paradise Plastic Enterprises Ltd. (supra) and that of the Apex Court rendered in the case of Amco Batteries Ltd. (supra). In the case of Paradise Plastic Enterprises Ltd. on an identical issue pertaining to the includability of cost of moulds in the assess able value the Tribunal noted that there was no suppression of facts and an in tention to evade the payment of duty and on that ground held that the demands were time barred. The findings recorded in Paras 3 and 4 are noted her below : -
"3. It is contended on behalf of the appellant that the delay in payment of duty on the amortized cost of the moulds and dies supplied free of cost by four parties was only for the reason of delay in getting the required information from them, There was no suppression of facts on the part of the appellant nor was then any intention to evade payment of duty. Invocation of Section 11 AC is, therefore, not justified. The show cause notice was issued nearly after 2 1/2 years of the department having come to know of the short payment of duty. Therefore, the demand is barred by limitation also. In any view of the matter there were conflicting rulings of the Tribunal on the question of includability of cost of amortized in the assessable value. In CCE, Aurangabad v. Marathwasda (sic) Glass Co. P. Ltd., 1999 (85) ECR 94, Creative Cartons v. CCE, Mumbai, 1999 (106) E.L.T. 79 = 1999 (64) ECC 738 (T) and Velpack Industries Ltd. v. CCE, Mumbai in Appeal No. E/6222/92-A it was held that cost of moulds and dies supplied free of cost are not includible in the assessable value. In Flex Industries Ltd. v. CCE, 1997 (91) E.L.T. 120 a different view was taken. Subsequently, a Larger Bench of the Tribunal resolved the issue in Mutual Industries Ltd. v. CCE, Mumbai, 2000 (119) E.L.T. 578 (Tri.) holding that amortization of cost of moulds was necessary. Under these circumstances, the appellant may not be burdened with the liability to pay penalty especially when it had deposited the duty amount before the issue of show cause notice.
4. We find merit in the contention raised by the appellant. During the relevant period the issue regarding inclusion of amortized cost of moulds in the assessable value of the goods was not finally settled. It is true that the assessee paid differential duty much before the issue was settled by a Larger Bench of this Tribunal. But at the same time when different orders of the Tribunal had taken conflicting views on the liability, it cannot be contended that there was wilful suppression of fact on the part of the appellant in order to avoid payment of duty. Under these circumstances, we, therefore, hold that imposition of penalty under Section 11AC was not justified in this case. We, therefore, set aside the demand of penalty against the appellant under the impugned order and allow the appeal."
We notice that the Apex Court also in the case of Amco Batteries Ltd. have no at the outset as follows :-
"1. It is apparent that in taxation matters, amendments, clarifications, exemption notifications or their withdrawal play an important role in increasing litigation. Repeatedly, it is stated that law and procedure thereunder is required to be streamlined and simplified, yet clarifications, amendments and notifications are issued creating confusion and leaving Judges and Lawyers to search for their exact meaning. In such a state of affairs, in some cases, it is difficult to draw inference of fraud, willful concealment or suppression of facts so as to attracted penal consequences."
Later, in Paras 9 and 10 have noted as follows :-
"9. From the facts stated above, particularly the fact that entire movement of waste and scrap to the job workers and receipt of ingots manufactured by the job workers is recorded in regular books of accounts and proper documentation is maintained in form of delivery challan and that there was no reason for the appellant to suppress as it was entitled to have facility of Modvat scheme, it would be difficult to hold that there was any wilful suppression on the part of the appellant which would empower the authorities to invoke extended period of limitation under proviso to Section 11A(1) of the Act. This has been made clear repeatedly by this Court. In Padmini Products v. CCE, Bangalore, 1989 (4) SCC 275 this Court has held that something positive other than mere inaction or failure on the part of the manufacturer or producer of conscious or deliberate withholding of information when the manufacturer knew otherwise, is required to be established before it is saddled with any liability beyond the period of six months. The Court pertinently observed that mere failure or negligence on the part of the producer or manufacturer either not to take out a licence in case where there was scope for doubt as to whether licence was required to be taken out or where there was scope for doubt whether goods were dutiable or not, would not attract Section 11A of the Act.
10. In the present case also there is no material on record from which it could be inferred or established that duty of excise was not levied or paid by reason of any fraud, collusion or any willful misstatement or suppression of facts, or contravention of any of the provisions of the Act or the Rules made thereunder with intent to evade payment of duty. It was a bona fide belief on the part of the appellant that scrap and waste, which was recovered while manufacturing batteries, was exempt from levy of excise duty. Further, appellant was entitled to get benefit of Modvat scheme, therefore, there was no justifiable reason for the appellant to suppress any fact."
8. In view of the above rulings, which have been applied in the case of Creative Micro Systems, we are of the considered opinion that in the present case it cannot be held that there was suppression of any material for the purpose of evading duty. In view of the conflicting judgments on the issue, the appellants are entitled to seek the benefit of time bar. Therefore, while upholding the matter on merits in the Revenue's favour, we have to hold that the demands are barred by time and not liable to recovery. The appeal is disposed off in the above terms.