Custom, Excise & Service Tax Tribunal
Schneider Electric It Business India ... vs Commissioner Of Central Excise, ... on 1 May, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No.20689-20696/2014 Application(s) Involved: E/Stay/25719/2013, E/Stay/25816/2013, E/Stay/25817/2013, E/Stay/25818/2013, E/Stay/25819/2013, E/Stay/25820/2013, E/Stay/25821/2013, E/Stay/25822/2013 in E/25536/2013-DB, E/25608/2013-DB, E/25609/2013-DB, E/25610/2013-DB, E/25611/2013-DB, E/25612/2013-DB, E/25613/2013-DB, E/25614/2013-DB Appeals involved: E/25536/2013-DB, E/25608/2013-DB, E/25609/2013-DB, E/25610/2013-DB, E/25611/2013-DB, E/25612/2013-DB, E/25613/2013-DB, E/25614/2013-DB Schneider Electric It Business India Pvt Ltd. (Formerly known as American Power Conversion (I) Pvt. Ltd.) 187/3 And 188/3, Jigani Industrial Area, Jigani, BANGALORE KARNATAKA 562106 Appellant(s) A Thomas George Fin Controller Schneider Electric It Business India Pvt Ltd 187/3 And 188/3, Jigani Industrial Area, Jigani, BANGALORE KARNATAKA 562106 Appellant(s) Shishir Agarwal Schneider Electric It Business India Pvt Ltd No.187/3 And 188/3, Jigani Industrial Area, Jigani BANGALORE DIST KARNATAKA 562106 Appellant(s) S Shivaram Former Manager Logistics Schneider Electric It Business India Pvt Ltd 187/3 And 188/3, Jigani Industrial Area, Jigani, BANGALORE KARNATAKA 562106 Appellant(s) Srikanthan Sathanam Former Financial Controller Schneider Electric It Business India Pvt Ltd No.187/3 And 188/3, Jigani Industrial Area, Jigani BANGALORE DIST KARNATAKA 562106 Appellant(s) Pankaj Sharma General Manager American Power Conversion I Pvt Ltd 187/3 And 188/3, Jigani Industrial Area, Jigani, BANGALORE KARNATAKA 562106 Appellant(s) Deepak Sharma American Power Conversion India Private Ltd No.187/3 And 188/3, Jigani Industrial Area, Jigani BANGALORE DIST KARNATAKA 562106 Appellant(s) Veeramani Someshwar Former Compliance Head Schneider Electric It Business India Pvt Ltd 187/3 And 188/3, Jigani Industrial Area, Jigani, BANGALORE KARNATAKA 562106 Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax - BANGALORE-LTU 100 FT RING ROAD JSS TOWERS, BANASHANKARI-III STAGE, BANGALORE, KARNATAKA 560085 Respondent(s)
Appearance:
Shri G.SHIVADASS, ADV.
WORLD TRADE CENTER NO.404-406, 4TH FLOOR, SOUTH WING, BRIGADE GATEWAY CAMPUS,NO.26/1DR.RAJKUMAR ROAD, MALLESWARAM WEST, BANGLAORE -560055 For the Appellant Shri P.R.V. Raman, Sp. Counsel For the Respondent CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER Date of Hearing: 4/2/2014 & 5/2/2014 Date of Decision: .
Order Per : B.S.V.MURTHY In this case, the matter first came up for hearing on 11/07/2013 and was adjourned to 06/11/2013 and it was decided that stay petitions and appeals have to be listed together for final hearing keeping in view the fact that there were request for early hearing by both sides and the cases involved substantial revenue. The matter came up for final hearing on 04/02/2014 and since the hearing could not be completed it was heard on 05/02/2014 also. Thereafter both sides wanted to make written submissions and the written submissions were received from both sides thereafter.
2.1. American Power Conversion (I) Pvt. Ltd. is a manufacturer of Inverters, Un-interrupted Power Supply Systems (UPS), Power distributions Units (PDUs), etc. They have two EHTP units/ EOUs with Central Excise Registration Numbers AACCA6398QXM002 and AACCA6398QXM001. The two registered units which were operating with common bonded warehouses and common inventory were merged into single registration with effect from 5.3.2009 permitted by LTU vide their letter C. No. N-IIL4&17/2009/LTU-GTL-5 dated 1.04.2009. 2.2. The Directorate of Revenue Intelligence (DRI), Bangalore received information that APC were evading Customs and Central Excise duties on a large scale by resorting to various methods including under-valuation of Inverters/ UPS cleared to Domestic Tariff Area (DTA), diversion of raw-materials/ inputs, imported and procured locally duty free, in DTA and improperly accounting/ not accounting raw-materials/ inputs, imported and procured locally duty free. 2.3. Based on the above information, DRI, Bangalore, had conducted searches at various premises of APC on 24-04-2008, as mentioned below:
i. Factories of APC located at 187/3 & 188/3, Jigani Industrial Area, Jigani, Bangalore 562 106; ii. Distribution center known as India Distribution Center (IDC) situated at # 263, IV Phase, Bommasandra Industrial Area, Jigani Link Road, Jigani; iii. Premises of Rolex Logistics Private Limited, No. 237/82/2, Hosur Main Road, Singasandra Village, Begur Hobli, Bangalore 560 068 (service centre of APC); iv. Record keepers of APC, Iron Mountain India Private Limited, Plot No. 31, Jigani Industrial Area, II Phase, Near OTIS circle, Jigani; V. Office premises of APC located at No.27, Lavelle Road, Bangalore.
2.4. During the course above searches, the officers of DRI seized documents/ data in Hard Disk Drives/ Tapes/ Compact Discs (CDs) and the Laptop of Shri. Veeramani Someshwar relating to the purchase of raw materials and sale of UPS and Invertors as detailed in the Annexure to the respective Mahazars dated 24-4-2008, drawn at the above mentioned premises as discussed in the subject show cause notice and statement of facts. 2.5. Besides these seized documents and soft data, APC had also submitted various other data/ documents pertaining to their operations during the investigation. Considering their transaction volumes, APC had submitted their data mainly in soft form in CDs. Data/ documents were also obtained from APC's Service Providers, Bankers, Software Technology Park of India (STPI), Large Tax Payer Unit (LTU), etc. 2.6. A detailed investigation was carried out, based on the information, on the following.
i. Removals of manufactured goods and raw-materials/inputs to DTA by APC; ii. Removals of manufactured goods and raw-materials/ inputs both imported and procured locally duty free, by APC to its Service Centre; and iii. Receipts, usage and accounting, of raw-materials/ inputs both imported and procured locally duty free, by APC.
2.7. During the course of investigation, along with the scrutiny of the documents, analysis of soft data downloaded from the systems of APC and data subsequently entered and provided to DRI by APC, statements of the officials of APC were recorded under Section 108 of the Customs Act, 1962. Investigations were conducted and proceedings were initiated which have culminated in duty demands on various types of activities of the appellants undertaken by them as detailed below:-
Ground Date of the Show Cause Notice 23.07.2010 Order-in-Original No. & date 165/2012 dated 4.01.2013 Issue Allegation Period Amount of Redemption fine duty A Undervalua-
tion Goods removed from factory to IDC March 2002 September Rs.
13,99,62,662/ Rs. 2,15,00,000/-
2009Goods removed from March 2002 Rs.
Rs. 1,87,00,000/ factory to ISC March 12,36,03,899/ 2008 B Clandestine removal Removal of Silicon UPS April 2002 July 2007 Rs.
6,10,02,361/ Rs. 1,30,00,000/ Diversion of finished March Rs.
Rs. 4,45,00,000/ goods, IUT and imported goods 2002-July 2007 39,49,16,598/ Goods lying in stock 15.07.2007 Rs.
Rs. 1,52,00,000/ 6,67,87,375/ C Account Alias April 2001 Rs.
Rs. 8,45,00,000/-
to March 87,46,71,997/ 2008 D Return to Vendors July 2001 to Rs.
Rs. 1,80,00,000/ July 2007 15,69,41,952/-
E Cycle Count April 2001 to March Rs.
18,79,67,528/ Rs. 2,34,05,000/ 2008 F Credit Material Authorisation November Rs.
Rs.
2005 to 9,58,07,672/-
95,00,000/ June 2007 Rs.
Rs.
Total 210,16,62,044/ 24,83,05,000/-
3. The written submissions made by both sides and the submissions made during the hearing have been considered in detail and we also took time to study the detail in great detail. After considering all the submissions and details, it was found that it would be appropriate to remand the matter in view of the following submissions made by the appellants as detailed in the written submissions and reproduced below:-
a. Para DF9.1 of the 010 holds that out of 17 Annexures in additional submission Part III said to have been submitted by APC, the following 10 Annexures are not available:
i) Quantification of duty if at all payable by APC Annexure-2
ii) Quantification and reconciliation Annexure-4
iii) DRI allegation and analysis by APC- Annexure-3
iv) Fire accident details - Annexure-9, 10 & 11 V) Information provided by APC not available Annexure-12
vi) Worksheets provided to DRI not contained in DVD Annexure-13
vii) RTV confirmation from vendor Annexure-16 b. The Commissioner further holds in Para DF9.1 that since the following annexures were not made available during the investigation proceedings, he is unable to take the same on record:
(i) The duty quantification and the duty payable annexure prepared by APC
(ii) The quantification and reconciliation Annexure.
(iii) The annexure known as 'DRI allegation and analysis'
(iv) The annexure showing the details of their fire accident.
(v) Information and worksheets provided to DRI in DVD.
(vi) The records in respect of RTV transactions.
c. APC has submitted the following Annexures along with the additional submissions:-
S. No. Details alleged to have been not given by the Appellants Reference to the annexure under which the details were given Relevance of the worksheet 1 Quantification of duty if at all payable by APC Annexure 2 to the Additional Submission given in Hard Copy. The workings were based on the various details which were given for each allegation in the Reply to Show Cause Notice and the Additional Submissions Part II and III This is a summary sheet showing the ultimate liability if any, that could arise in respect of each rounds of demand, after taking into consideration the various reconciliation and documentary evidences placed on record by APC.2
Quantification and reconciliation The various evidences relied upon by the DRI in the Show Cause Notice in support of their allegation were analyzed by the Appellants and a Para.
wise comment on the said evidences based on the various reconciliation undertaken by the Appellants were submitted in Hard Copy in Annexure Additional submission-Part III-4 Submissions made on each of The evidences which were relied upon in the Show cause Notice. It would be evident from this Annexure that the basis for the entire case set up by the DRI is incorrect.3
DRI allegation and analysis by APC This pertains to the Para wise Comments on the allegation raised by the DRI in the how Cause Notice which was submitted in hard Copy in Annexure-3 to the Additional Submissions Part III Para wise comments on the allegations made in the Show Cause Notice 4 Fire accident details All the letter filed by the Appellants intimating the Department about the fire accident were submitted long with the reply to the Show Cause Notice Factual submissions 5 Information provided by APC not available Given as Annexure 12 in Hard Copy along with the additional Submission Part III. This contains details of various documents submitted by APC during the course of investigation.
This inter-alia includes details of various duty paying documents which were not considered by the Department while issuing the Show Cause Notice or while passing the impugned order 6 Worksheets provided to DRI not contained in DVD Given as Annexure 13 in Hard Copy along with the additional submission Part III.
In various places in the Show Cause Notice, DRI has made an allegation that the details were given by APC which were the basis for quantifying the duty demand and the same were stated to be part of DVDII provided along with Show Cause Notice. However, on perusal of the said DVD, it was noticed that various details which were alleged to have been given by APC were not part of the said DVD. APC therefore is not able to examine the said details and provide their submissions on the same.7
RTV confirmation from vendor Given as Annexure 16 in Hard Copy along with to the additional submission Part III.
In respect of the demand under the ground of 'Return to Vendors' it is the case of the Department that the duty-free goods brought into the factory for repair were not returned to the vendors but were removed into the DTA without payment of duty. APC has obtained/ produced confirmation from the Vendor regarding receipt of goods after repair. This would prove that the duty-free goods were not removed into DTA, as alleged.
The appellants also produced a copy of the acknowledgment evidencing all the above documents which were held to have not been received by the learned Commissioner.
4. In view of the fact that the matter involves huge stakes of revenue for both sides and even if we take a view on other issues, where these documents and details may not be relevant, the matter in any case would have to be remanded in respect of issues where these documents would be relevant, we consider that it would be appropriate to make an open remand at this stage itself even though this is being done with great reluctance. Accordingly the impugned order is set aside and the matter is remanded to the original adjudicating authority with a request to consider all the matters afresh and give reasonable opportunity to the appellants to present their case in detail, consider all the submissions that may be made at the time of fresh hearing and pass a well reasoned order. The Commissioner is requested to ensure that none of the submissions are omitted while discussing the issues and ensure that all the issues are dealt with so that at least when the matter comes up next time, it can be decided finally. Accordingly, the impugned order is set aside and the matter is remanded to the original authority for necessary action. (Pronounced on ) S.K. MOHANTY JUDICIAL MEMBER B.S.V.MURTHY TECHNICAL MEMBER Raja.
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