Custom, Excise & Service Tax Tribunal
Akasaka Electronics Ltd vs Commissioner Of Central Excise, Mumbai ... on 24 January, 2008
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. II Appeal No. E/3281/01 Arising out Order-in-Appeal No. 29/01/COMMR/M-VI dated 28.9.2001 passed by the Commissioner of Central Excise, Mumbai VI For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr.K.K.Agarwal, Member (Technical) ====================================================
1. Whether Press Reporters may be allowed to see 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 CESTAT (Procedure) Rules, 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 Departmental authorities?
Akasaka Electronics Ltd. Appellant Vs. Commissioner of Central Excise, Mumbai VI Respondent Appearance:
Shri M.H. Patil, Advocate for the appellant Shri S.N. Prasad, SDR for the respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr.K.K.Agarwal, Member (Technical) Date of hearing : 24.1.2008 Date of decision : 24.1.2008 O R D E R No:..
Per: Mr.K.K.Agarwal, Member (Technical) The appellants are engaged in the manufacture of printed circuit boards for the manufacture of which various tools/dyes were required. These tools/dyes were either supplied by their customers free of cost or were developed by the appellant and billed to customers. In case where the client/buyer of the appellant was supplying tools/dyes required for the manufacture of goods, the appellant was not including the cost of amortization of dyes/tools into the assessable value of the goods cleared on payment of duty from the factory. In view of this a show cause notice was issued to them that they were required to include the value of the tools/dyes on amortization basis and since this was not done the show cause notice sought to demand duty amounting to Rs. 38,89,187/- along with interest and proposal for penalty. Show cause notice also invoked the extended period as the material fact that the cost of tools and dyes were not being included was held back from the department. The show cause notice was adjudicated by the Commissioner who confirmed the duty of Rs. 38,89,187/- along with interest and imposed a penalty of Rs. 32,35,066/- under Section 11AC and Rs. 64,944/- under Rule 173Q of the Central Excise Rules, 1944.
2. The learned counsel for the appellant fairly concedes that the issue on merits is squarely covered by the decision of the larger bench of the Tribunal in the case of Mutual Industries 2000 (117) ELT 578 against them and in view of the same their appeal is limited only on the point of limitation. It was submitted that they are also disputing the manner in which the cost of amortization has been determined but since the matter is very old and quite a few customers on whose behalf the goods had been manufactured have closed the units and records are not readily available, they are not pressing the dispute regarding the determination of cost of amortization and only limiting their plea to that of limitation. The period of dispute in the present case is 1.1.95 to 31.7.2000 and the show cause notice was issued on 2.11.2000. It was submitted that the issue whether the cost of tools/dyes supplied free by the customer is required to be included in the value of goods manufactured out of this tools/dyes has been subject matter of a dispute and there have been contradictory decisions by the Tribunal wherein earlier in the case of CCE vs. Marathwada Glass Co. P. Ltd. 1999 (85) ECR 94, Creative Cartons vs. CCE 1999 (106) ELT 79, Velpack Inds. Ltd. vs. CCE Appeal no. E/6222/92-A it has been held that the cost of such moulds was not required to be included, whereas in the case of Flex Inds. 1997 (91) ELT 120 a contrary view was taken and therefore the matter was referred to the larger bench in the case of Mutual Industries cited supra and in this case the five member bench ultimately held that the cost of mould was to be amortized and includable in the assessable value. It was accordingly submitted that in view of the conflicting decision by the Tribunal the appellant could not have an intention to evade duty and were under the bonafide belief that the cost of such moulds is not liable to be included. In support of this, attention was invited to the decision of Bright Brothers 2004 (61) RLT 679 wherein in identical circumstances, it was held no penal action is warranted as the issue of includability of amortization cost of moulds for valuation of components produced was not free from doubt at material time and therefore the extended period is not invokable and the interest and penalty were set aside. Similarly, in the case of KK Nag Ltd. 2003 (58) RLT 159 it was held that the extended time limit not invokable as assessee had filed classification list/price list along with sale contract showing free supply by the customer and in view of conflicting judgment of CEGAT, when the law was not settled till the decision by the larger bench. Even in the case of Mutual Industries, where period involved was from October 1986 to August 1990 it was held that extended period is not invokable in terms of the contract, which was known to the department. Attention was also invited to the findings of the Commissioner in which the Commissioner has not denied that the fact of free supply of moulds/tools was in the knowledge of the department but the Commissioner has only stated that the fact that the value shown by them did not include the cost of moulds was suppressed. Since the cost of mould is much more than the unit price than the PCB, the question of suppressing this fact simply does not arise. In view of this it was submitted that only demand for the normal period can be demanded and no penalty and interest is to be paid.
3. Heard both sides.
4. We have considered the submissions. We find that on merits the appellants have not contested the case as the value of the mould is liable to be included in the value of the goods and there is no dispute on that. The only challenge is on the invokability of the extended period. It is a matter of record that there were contrary decisions by the Tribunal on this issue and the matter was resolved by the larger bench in 2000. The fact that the customer was supplying moulds free of charge was very much in the knowledge of the department and this fact has not been denied by the Commissioner. The only charge spelled out is that the fact that the cost of mould was not included in the price indicated by them was suppressed. This cannot be accepted as the appellants were manufacturing goods out of their own moulds as wells as moulds supplied by the customers and the cost of moulds is much higher than that of the PCBs manufactured by them. This fact was very apparent from the price declared by them and cannot be said to have been suppressed. Even otherwise, their customers who were manufacturers of TVs were entitled to get the credit of the duty paid by them and therefore, they could not have any intention to evade duty. In view of these circumstances and the decisions cited by the appellants on similar facts cited supra, we hold that the extended period is not invokable and duty can be demanded within the period of one year preceding the show cause notice. For this limited purpose the matter is remanded back to the Commissioner to quantify the duty which is payable within the normal period. The demand of interest and penalty imposed are set aside.
5. Appeal is partly allowed as per the above terms.
M.V. Ravindran K.K.Agarwal Member (Judicial) Member (Technical) sr