Customs, Excise and Gold Tribunal - Bangalore
Mrf Limited vs Cce on 8 April, 2004
Equivalent citations: 2004(170)ELT69(TRI-BANG)
ORDER
K.C. Mamgain, Member
1. This appeal is filed by M/s MRF Ltd. against Order-in-Original No. 10/2001 dated 29.08.2001, passed by the Commissioner of Customs & Central Excise, Hyderabad.
2. Shri S. Ignatious, Ld Advocate appearing for the appellants pleaded that M/s MRF are manufacturing intermediate product, namely Compound Rubber (without butyle) falling under sub heading 4005.00 of Central Excise Tariff Act, 1985 for captive consumption in manufacture of goods within the factory and are also clearing these goods to their other units on payment of duty on the value arrived at on costing certificate issued by the Cost Accountant in terms of Rule 6 (b) (ii) of Central Excise (Valuation) Rules, 1975. The Cost Audit Group of Central Excise have conducted cost audit and noticed that the appellants have adopted lesser values to the extent of Rs. 5.56 for one kg of compound rubber during the period from 10/95 to 9/96 resulting in short levy of the Central Excise duty. Based on the report of the Cost Audit Group, as show cause notice was issued to the appellants and the Commissioner confirmed the demand of duty amounting to Rs. 59,12,041/- and imposed penalty of Rs. 26,176/- under Section 11AC and Rs. 50,00,000/- under Rule 173Q of the Central Excise Act, 1944. the Ld Advocate pleaded that in this case the period covered by show cause notice is from 10/95 to 9/96 and the show cause notice was issued on 28.9.2000 which is clearly time barred and the appellants have not suppressed any facts with an intention to evade payment of duty. He stated that during the relevant period, the value of the goods was determined on the basis of cost construction method under Rules 6 (b) (ii) as per instructions relevant at that time. However the Cost Audit Group determined the value for the said period based on the Board's Circular F. No. 258/92/96-CX dated 30.10.1996. He stated that since the disputed period is only from 10/95 to 9/96, they had not included overheads including advertisement, interest, etc. in the cost of production as it was first time clarified by the above said Circular. They have only added the cost of material labour cost and the profit as was prevalent at the time. Secondly, the goods manufactured by them were being cleared to their other factories for internal consumption for manufacture of the final products. Even if they have paid the duty at higher price they would have got the same as Modvat credit in their other units. Therefore, they have no intention to avoid the payment of duty. He relied upon the Tribunal decision in case of P.T.C. Industries Ltd. vs. Commissioner of Central Excise, Jaipur reported in 2003 (159) ELT 1046 wherein it was held that sale of goods by one unit to other unit of same assessee under Modvat Scheme is revenue neutral as whatever duty paid in one unit is available in the next unit as credit. Therefore, demand under Section 11A in such cases are unwarranted and suppression of facts cannot be alleged in this case. He also referred to the decision of this Bench in case of Smithkline Beecham Consumer Health Care Ltd. vs. CCE, Visakhapatnam, reported in 2003 (156) RLT 180 (CESTAT - Bang.) wherein it was held that -
"2. After hearing both sides and considering the submissions made & the material on record, it is found, it is on record that both the Assessing Officer and the Cost Auditor had examined the same cost certificate as provided by the appellants. While the Assessing Officer accepted the details as given by the appellants, the Cost Auditor wanted some more details on the same. The same could have been asked for by the Assessing Officer himself before finalizing the assessments. Since there is no material on record of deliberate with holding of casts data as required and demanded by the Department, the element which appear to be not included in the Certificate due to a belief on part of the appellants that such elements of cost were not required to be included was omitted only due to bonafide belief. It was the duty of the proper officer, i.e. the Assistant Commissioner finalizing the assessments under Rule 9B (5) read with Rule 9B (6) to have asked for detailed breakup, if the same was withheld or not correctly tendered then a conclusion could be arrived at that there was a willful act of suppression. The reading of proviso clause to Section 11A (1) of the Central Excise Act on a plain reading indicate that as far as fraud and collusion are concerned, the intent to evade is built into the concept of those words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word 'willful' which would mean intent to evade duty. The next set of words in the proviso are clause of contravention of any of the provisions of this Act or Rules again qualified by he immediately following words 'with intent to evade payment of duty'. Therefore a mistake or suppression of fact, which is not willful, cannot be a cause to invoke the proviso clause of Section 11A (1) as in this case. It is found that no charge of fraud or collusion have been invoked. In view of that and the fact that proper documentation have been maintained and produced without demur or delay, the entire movements are recorded. Modvat credit for the duties allegedly now being determined as short paid would have been eligible to the appellants at packing stations, there cannot be a conclusion of 'willful suppression of facts with intent to evade duty'. Extended period to recover duty, consequently, las invoked, would not be invokable in this case also, as held by the Apex Court in the case of AMCO Batteries Ltd., 2003 (55) RLT 272 (S.C.). The entire period being barred by limitation, no duty demand could be upheld."
The Ld. Counsel also stated that if there was any doubt about the costing done by the appellants at that time when certificate was filed by them, the department could have asked further information to verify its correctness which was not done in this case. Further there was no intention to avoid payment of duty.
3. Shri L. Narasimha Murthy, Ld. SDR for Revenue has stated that the reason for application of extended period is given by the Commissioner in his order in Para 6 (iv), wherein he observed that -
"6...(iv) In regard to the invoking extended period, it is on record that the assessees have deliberately undervalued their intermediate products cleared to their sister units, withholding certain vital information, which they were required to furnish. This matter would have not come to light but for the A.D. (Cost) reports. It appears not a simple inaction or failure on the part of the assessee to furnish material information. Further they submitted Cost Accountants certificate with incorrect particulars alongwith the price lists/declaration to the department and to the cost audit group at the earlier instance thereby suppressed the facts. In view of the special circumstances enumerated above, I am inclined to hold that the invoking extended period is proper and justified."
4. We have carefully considered the submissions made by both sides. We find that in this case, the appellants have filed cost account certificate based on the instructions available at the relevant time. They could not include the extra amount in valuation of the products used by them on the basis of Board Circular dated 30.10.96 as it was not available at the relevant time. Secondly, whatever duty they were paying at the manufacturing unit of intermediate goods, the same has been taken as credit by other unit where these goods were being taken for manufacture of finished products. Therefore, following ratio of the Tribunal decision in case of P.T.C. Industries Ltd. (supra),we find that there is revenue neutrality in this case. Commissioner has not given any evidence that the failure on the part of the appellants was with and intention to evade the payment of duty. We do not find any merit in the order of the Commissioner which is set aside and the appeal is allowed.