Custom, Excise & Service Tax Tribunal
M/S Eveready Industries India Ltd vs Cce, Noida on 14 October, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing/Order : 14.10.2014
No. E/Stay/61021/2013 & E/60152/2013-EX(DB)
[Arising out of Order-in-Appeal No. 113/CE/APPL/NOIDA/2013 dated 17.5.2013 passed by the Commissioner (Appeals), Customs, Central Excise & Service Tax, Noida]
For Approval & Signature :
Honble Mr. Justice G. Raghuram, President
Honble Mr. R.K. Singh, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would 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 Department Authorities?
M/s Eveready Industries India Ltd. Appellant
Vs.
CCE, Noida Respondent
Appearance:
Shri Hemant Bajaj, Advocate - for the appellant Shri Ranjan Khanna, D.R. - for the respondent Coram : Honble Mr. Justice G. Raghuram, President Honble Mr. R.K. Singh, Member (Technical) F. Order No. 54099/2014 Per Justice G. Raghuram :
At the stage of consideration of the stay application, we have heard ld. Counsel Shri Hemant Bajaj for the appellant and ld. AR for Revenue Shri Ranjan Khanna in extenso and having regard to the substantial issue in the appeal falling within a narrow compass, we dispose of the appeal itself and with the consent of the parties. We do so after waiving pre-deposit.
2. The appellant is a registrant under provisions of the Central Excise Act, 1944, being a manufacturer of excisable goods viz. primary cells and primary batteries.
3. On 27.2.2012, the Assistant Commissioner, Central Excise, Division-IV, Noida issued a Show Cause Notice to the appellant alleging the following (to the extent relevant and material) :
(a) That audit of the appellants accounts for the period April 2009 to March, 2010, during 21.11.2010 to 27.11.2010 resulted in a report dated 21.3.2011 wherein the audit team observed that the appellant was engaged in the manufacture of AA batteries and made incidental sale of these batteries to three units viz. M/s PMS Flashmatics Pvt. Ltd., Haridwar; M/s L.G. Electronics, Pune; and M/s Elin Electronics, Baddi;
(b) That the purchase orders in relation to the goods reveal that the sales were on FOR destination basis; that the ownership as well as risk of damage/loss of goods remained with the appellant till the destination delivery of the batteries; that the appellant had paid Rs. 9,48,837/- towards outward freight in respect of these institutional sales but failed to include this amount in the value of the batteries, as per the provisions of the Kxplanation to Rule 5 of the Valuation Rules, 2000, since the MRP provisions do not apply in respect of institutional sales; and
(c) That the appellant in its response to a departmental letter had submitted, inter alia that the value of outward freight of Rs.9,48,837/- was included in the assessable value since these are institutional sales value; that the assessee and buyers are not related and price is the sole consideration for sale, in terms of Section 4 of the 1944 Act this is the transaction value; and since no additional consideration was received by the appellant on these transactions the amount of Rs.9,48,837/- was not required to be included in the transaction value for remittance of excise duty;
4. The Show Cause Notice called upon the appellant to remit excise duty of Rs.66,738/- for the period April 2011 to November 2011 on the premise that outward freight was includable but was not included in the assessable value, apart from penalty and interest.
5. On 24.4.2012, the appellant furnished a reply to the Show Cause Notice wherein it is clearly pleaded that outward freight was included in the assessable value and specifically that no additional consideration was received (by the appellant) from buyers and therefore the demand for remittance of further excise duty is mis-conceived.
6. The ld. Assistant Commissioner, Noida-IV passed the Order-in-Original dated 1.2.2013 confirming the demand of excise duty of Rs.66,738/- apart from penalty of an equivalent amount and directed recovery of interest under Section 11AB of the Act. Para 17 of this order reads as under :
17. The evidence on record show that the party have collected more than the amount than what has been included in the assessable value of the excisable goods manufactured by them. There is no evidence on record to show that the entire amount collected by the party in relation to the sale of excisable goods whether as a part of the price or over and above the price is included in the assessable value.
7. The paragraph of the order-in-original (extracted above) clearly illustrates the irrelevance and perversity in the reasoning process recorded by the ld. Primary authority. The paragraph comprises two sentences. The first sentence concludes that the evidence on record establishes that the party had collected more than the amount included in the assessable value of the goods manufactured by the appellant. The second sentence records that there is no evidence on record to show that the entire amount collected by the party in relation to the sale of the excisable goods, whether as part of the price or over and above the price disclosed as the assessable value. The adjudicating authority thus simultaneously records the existence and non-existence of evidence as to the appellant collecting freight charges over and above the assessable value disclosed. Nowhere in the primary order is there any reference whatsoever to any material, oral or documentary, that establishes the appellant having collected (from the institutional buyers of the batteries/cells) any amount in addition to the transaction value, on which duty was remitted. The Show Cause Notice fails to even allege that the appellant had recovered (from the institutional purchasers), any amount in excess of the transaction value on which duty was remitted.
8. Aggrieved by the primary order the appellant preferred an appeal which was rejected by the ld. Commissioner (Appeals), Customs, Central Excise & Service Tax, Noida, on 17.5.2013. Para 3.1 of this order clearly adverts to the main grievance in the appeal namely that outward freight was included in the assessable value and therefore was not liable to be added again for remittance of duty. This contention of the appellant is adverted to in detail in paras 3.2 and 3.3 of the appellate order as well. Paras 4.3 and 4.5 of the appellate order advert to the certificate issued by the Chartered Accountant, the books of account, consignment notes of the transporter M/s New Indian Transport Corporation, Lucknow and to two purchase orders and invoices in relation to the batteries/cells sold by the appellants to the three companies. According to the ld. Appellate Commissioner neither the purchase orders, the invoices nor the certificate of the Chartered Accountant substantiate the appellants contention of not having separately collected freight charges from the buyers of the goods. Consequently, the appellate Authority found no warrant for interference and dismissed the appeal. Hence the assessee is before us.
9. On the admitted factual scenario, the appellant sold the excisable goods on FOR destination basis to the three institutions and remitted excise duty on the transaction value. The primary Authority recorded the fact and a conclusion that the risk and responsibility for the goods till delivery at the buyers destination is of the appellant; and that the transaction value was the basis for remittance of duty. In the circumstances, if Revenue was of the view that the appellant had separately collected freight charges (for delivery of the goods from the factory gate to the purchasers premises) and therefore the value of such transport charges, (separately collected by the appellant from the buyers) ought to be added to the transaction value for remittance of duty, the burden is clearly on Revenue, to establish this fact. Such charge, it is axiomatic, must be set out by appropriate, clear and specific pleadings in the Show Cause Notice, clearly alleging that the appellant had separately collected outward transport charges from its customers but failed to add the same to the transaction value. The Show Cause Notice sets out no such allegation.
10. In the Show Cause Notice, the primary order and the impugned order of the ld. appellate Authority, Revenue proceeds on the premise that the burden is on the appellant to establish that it did not separately collect the outward freight charges from the buyers, over and above the transaction value disclosed in the invoices. Such premise is conceptually fallacious. The burden of establishing an allegation, in the circumstances of this case, is on Revenue and that burden has not been discharged either by any pleading in the Show Cause Notice or by any evidence on record which discloses collection of transportation charges by the appellant, over and above the transaction value indicated in the invoices which was the basis for remittance of excise duty.
11. The conclusion recorded by the primary Authority in para 17 of the order-in-original is thus a perverse and ipse dixit conclusion based on no evidence, oral or documentary.
12. The ld. Appellate authority adopts the same fallacious premise, that the burden is upon the appellant to establish that it had not collected transportation charges (in addition to the transaction value) from buyers of its goods.
13. Ld. AR for the Revenue in desperation pleads that at best the impugned order be set aside and the matter remitted to the primary Authority for de novo adjudication. Reliance for this course of action is placed on the decision of this Tribunal in the Final Order dated 21.7.2014 in Excise Appeal No. 59838/2013, an appeal preferred by the same appellant.
14. The facts are substantially similar but in respect of an earlier period. Having perused the Final Order dated 21.7.2014 carefully we notice that paragraph 4.3 of the order of the ld. Appellate Commissioner (which was subject matter of the earlier appeal before this Tribunal) is substantially similar to para 4.3 of the order of the ld. Appellate Commissioner which is impugned in this appeal. In para-4 of its Final Order dated 21.7.2014, the Tribunal clearly recorded that each and every evidentiary document produced by the appellant was rejected by Commissioner (Appeals) on flimsy and frivolous grounds, which are self-speaking. However, the Tribunal considered it appropriate to set aside the matter and remit the same to the primary Authority for fresh examination of the documentary evidence and to re-decide the issue accordingly. Ld. AR urges that we replicate this example.
15. On a careful consideration of the matter, we are not persuaded to follow the earlier course of disposition recorded in the appellants own case and for good reasons, which we now proceed to record. In the facts before us the Show Cause Notice does not allege, either expressly or by implication that outward freight charges were separately collected by the appellant. There is also no evidence, oral or documentary on the record to facilitate a finding as to additional collection of outward freight by the appellant. The appellant clearly, specifically and categorically pleaded in response to the Show Cause Notice that since the sales were on FOR destination basis, the transaction value includes the value of freight and that the freight charges were not separately collected from the buyers and further that the amount of transportation charges paid by the appellant were disclosed in its books of account under the head of expenditure. Neither the primary nor the appellate Authority adverted to any evidence whatsoever, documentary or oral, on the basis of which the primary authority perversely in para 17; and the appellate Authority in the impugned order affirmed, that the appellant was required to include the value of transportation charges in addition to the transaction value, on which duty was paid. Neither the primary nor the appellate orders adverted to any evidence on record to justify this perverse conclusion (based on no evidence), concurrently recorded.
16. In the circumstances, remittance of the matter to the primary or even the appellate Authority would be an exercise in futility. The earlier order of this Tribunal dated 21.7.2014, remanding the matter to the primary authority, is not a law declared. The Tribunal was persuaded in the facts and circumstances of that case to remand the matter. In the present appeal and for reasons recorded by us supra, we find no justification for a ritualistic remand, the outcome of which is clearly beyond disputation.
17. For the reasons above, we allow the appeal and quash the impugned order dated 17.5.2013 of the ld. Commissioner (Appeals), Customs, Central Excise and Service Tax, Noida, with costs of Rs.2500/- payable to the appellant. We are persuaded to impose costs on account of the clear perversity in the order of the primary Authority reiterated by the appellate Authority leading to this wholly avoidable appeal which adds to public costs by way of an avoidable appeal to the CESTAT. Since the appeal itself is disposed of the stay petition also stands disposed of.
(Justice G. Raghuram) President (R.K. Singh) Member (Technical) RM 1