Custom, Excise & Service Tax Tribunal
C.C.E. Raipur vs M/S. Sail Bhilai Steelplant on 3 May, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH, NEW DELHI.
Date of Hearing/Decision: 03.05.2013
Cross Application No. E/CROSS/47/2006- EX [DB]
Appeal No. E/3402/2005
C.C.E. Raipur Appellant
Vs.
M/s. SAIL BHILAI STEELPLANT Respondent
(Arising out of the O-I-O No.42/RPR-II/2005 dtd.18.07.2005 passed by the Commissioner (Appeals-II) Customs & Central Excise, Raipur (CG)]. Hon'ble Ms. Archana Wadhwa, Member (Judicial) Hon'ble Mr. Rakesh Kumar, Member (Technical)
1. Whether Press Reporters may be allowed to see the :
Order for publication as per Rule 27 of the CESTAT (Procedure) Rule, 1982?
2. Whether it would be released under Rule 27 of :
the CESTAT (procedure) Rule, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair :
Copy of the order?
4. Whether order is to be circulated to the Department :
Authorities?
Appearance:
Sh. Nagesh Pathak, DR - for the appellant.
Sh. Anil Jain Counsel - for the respondent.
Coram: Hon'ble Ms. Archana Wadhwa, Member (Judicial) Honble Shri Rakesh Kumar, Member (Technical) Final Order No: 56515/2013 Per Rakesh Kumar 1.1 The Respondent has a unit of Steel Authority of India Limited, a integrated steel plant, is engaged in the manufacture of various iron and steel products, chargeable to Central Excise duty. While the prime manufactured products of the respondent viz., angle, rails, rounds etc., are sold though its branch sale offices situated at various places in India, other products like semis, defective/rejected iron and steel products and cuttings of iron and steel products are directly sold from respondents plant as to buyers selected by tendering process. One of the conditions of the tenders for sale of defective/rejected material, issued by the material Sales Department is that on receipt of the sale order the buyer shall deposit the amount as per details indicated in the sale order by demand draft, the payment shall be made within 28 days from the date of sale order or within the time as stipulated in the sale order and that if the date of payment is extended on request of the buyers, the buyer shall be liable to pay a ground rent at the specified rates. If the payment is made between 29th day to 35th days from the date of sale order, the ground rent payable shall be 0.5% of the sale value, if the payment is made between 36th day to 42nd days from the date of sale order, the ground rent payable shall be 1.25% of the sale value, if the payment is made between 43rd day to 49th days from the date of sale order, the ground rent payable shall be 2.25% of the sale value and if the payment is made between 50th day to 56th day from the date of sale order, the ground rent payable shall be 3.5% of the sale value on price. The Department was of the view that the ground rent being recovered by the respondent for period of delay in the making of payment is includible in the assessable value, as this amount is being collected in connection with the sale of goods. On this basis a Show Cause Notice dtd. 01.01.2004, was issued for demand of differential duty amounting to Rs. 14.13 lakhs in respect of sales of defective/rejected iron and steel products during period from Dec.98 to June 2003 along with interest under section 11AB and also for imposition of penalty on the respondent under section 11AC of Central Excise Act. The Show Cause Notice was adjudicated by Additional Commissioner vide order-in-original dtd.17.03.2005 by which the duty demand as mentioned above, was confirmed along with interest and besides this, penalty of equal amount was imposed on then under section 11AC. However on appeal being filed by the respondent against this order to Commissioner (Appeals), the Commissioner (Appeals) vide order-in-appeal dt. 18.07.2005 set aside the Additional Commissioners order and allowed the appeal, on the ground that while the original Adjudicating Authority has treated the amount being charged as ground rent, as storage charges and on this basis includible in the assessable value, while a reading of Clause 11 of the tender indicates that amounts being collected are the charges of delayed payment and there is nothing to suggest that these are storage charges and that in terms of Apex Courts judgment in the case of Union of India Vs. Bombay Tyres reported in 1983 (17) ELT 329(SC), the amount paid on account of delayed payment is not includible assessable value.
1.2 Against this order of the Commissioner (Appeals), this appeal has been filed by the Revenue in respect of Revenues appeal. The respondent has filed cross objection.
2. Heard both the sides.
3. Sh. Nagesh Pathak, ld. Departmental Representative, assailed the impugned order by retreating the grounds of appeal and pleaded that the amount being charged as ground rent is nothing but storage charges for the period of delayed in lifting of goods sold, that storage charges incurred by the respondent prior to clearance of goods are includible in the assessable value, that in term of Apex Court Judgment in the case of Bombay Tyres International Ltd. reported in 1983(14) ELT 1896 (SC) the sales organizations expense up to the delivery of goods, interest on inventory and marketing/selling organization expense are includible in the assessable value and that the amount being charged as ground rent is the expense incurred on storage of goods prior to completion of sales and hence the same is includible in the assessable value and as such the order of the Commissioner (Appeals) is not correct.
4. Sh. Anil Jain, the learned Counsel for the Respondent defended the impugned order by reiterating the findings of the Commissioner (Appeals) and pleaded that the amount recovered as ground rent is nothing but charges for delay in payment and as such the same are not includible in the assessable value.
5. We have considered the submission from both the sides and perused the records. The para 6 of the Show Cause Notice itself refers to para 11(b) of the terms and conditions for sale of material by tender from the stores department and on the perusal of the same, it is clear that the amount being charged as ground rent is for delay in making the payment by the buyers for the goods sold to them. This delay is counted from the date of sale order. The customer is expected to make the payment for the goods purchased by him within the period of 28 days from the date of sale order and if there is delay in making payment beyond 28 days, amounts at the rates varying from 0.5% of the sale price to 3.25% of the sale price are payable depending upon the period of delay. We do not find any basis for the Departments plea that the ground rent is the storages charges for the period of delay in lifting of the goods by the customers. Thus the ground rent is nothing but interest on receivables which is not includible in the assessable value, in view of Apex Courts judgment in the case of Union of India Vs. MRF Ltd. reported in 1998 (77) ELT 433(SC) .
In view of this we do not find any merit in this appeal by the Revenue. The same is dismissed. The cross objection also stands dispose of.
Archana Wadhwa Member(Judicial)
Rakesh Kumar Member(Technical)
S.Kaur
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