Custom, Excise & Service Tax Tribunal
M/S. Weir Minerals (India) Pvt Ltd vs Commissioner Of Central Excise, ... on 12 December, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/20576/2015-DB [Arising out of Order-in-Original No. 27/2014 dated 22/12/2014 passed by Commissioner of Central Excise , BANGALORE-II ] M/s. Weir Minerals (India) Pvt Ltd No 471/D1, 4th Phase, Peenya Industrial Area BANGALORE - 560058 KARNATAKA Appellant(s) Versus Commissioner of Central Excise, Service Tax And Customs Bangalore-II PB 5400 CR BUIDING, QUEENS ROAD, BANGALORE, - 560001 KARNATAKA Respondent(s)
Appearance:
Mr. Harish Bindu Madhavan, Advocate DELOITTE TOUCHE TOHMATSU INDIA PVT LTD CHARATERED ACCOUNTANTS,DEOLITTE CENTRE ANCHOARGE II 100/2 RICHMOND ROAD, BANGALORE - 560025 KARNATAKA For the Appellant Mr. Madhupsharan, AR For the Respondent Date of Hearing: 12/12/2017 Date of Decision: 12/12/2017 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER HON'BLE SHRI V. PADMANABHAN, TECHNICAL MEMBER Final Order No. 22992 / 2017 Per : V. PADMANABHAN The present appeal is filed against the Order-in-Original No.27/2014 22.12.2014. The appellant is engaged in the manufacture of slurry pumps, parts of pumps, walls, etc., under Chapter 84 of the Central Excise Tariff Act, 1985. The dispute covers the period April 2010 to December 2010. During the course of audit of the records of the appellant, the department noticed that the appellant was clearing certain goods to their own sister concern situated elsewhere. The duty payable on such goods was determined on the basis of the transaction value adopted in respect of sale to unrelated parties. The department was of the view that the valuation of clearances made by the appellant to their own sister concern are to be done in terms of Rule 8 of the Central Excise Valuation Rules, 2000 read with Section 4 of the Central Excise Act, 1944. Accordingly, valuation of goods for payment of duty in respect of clearances to their sister concern was re-determined on the basis of the CAS-4 certificate issued by the Cost Accountant and differential duty was worked out and paid by the appellant along with interest. However, the department subsequently issued show-cause notice which resulted in the impugned order, in which, not only the differential duty paid was upheld along with interest but penalty was also imposed under Section 11AC of the Central Excise Act, 1944. Aggrieved by the impugned order, the present appeal has been filed.
2. With the above background, we heard Mr. Harish Bindu Madhavan, learned Advocate appearing for the appellant and Shri Madhupsharan, learned DR appearing for the Revenue.
3. The learned advocate appearing for the appellant submitted that the differential duty was promptly paid by the appellant along with interest on the basis of the value arrived at as per CAS-4 norms. The same is also not being disputed in the present proceedings, however, the appellant challenges the penalty imposed on them. It is his contention that since the differential duty along with interest stands paid even before the issue of show-cause notice, there is no justification for imposition of penalty. He relied on the following case laws to support his arguments.
* Nirlon Ltd. vs. CCE, Mumbai: 2016-TIOL-96-SC-CX Taking the ground of revenue neutrality, he cited the decisions rendered in the case of Jay Yuhshin Ltd. vs. CCE: 2002-TIOL-126-CESTAT-DEL-LB and DIC India Ltd. vs. CCE: Final Order No.78376/2017 dated 1.12.2017
4. The learned DR defended the impugned order.
5. After hearing both sides and perusal of records, we find that the dispute relates to valuation of goods which were cleared by the appellant to their own sister concern. It stands admitted that such clearances are to be valued on the basis of the value adopted in terms of Rule 8 of the Central Excise Valuation Rules 2000 read with Section 4 of the Act. The differential duty also has been worked out on the basis of the CAS -4 certificate issued by the Cost Accountant. The appellant has further not disputed the differential duty payable, which already stands paid along with interest. The appeal is confined to the challenge to the penalty imposed in the impugned order.
5.1 We have gone through the various case laws cited by the appellant and we note that these case laws deal with facts which are similar to the one in question. In the case of DCI India Ltd., the Tribunal in similar facts has observed as follows:
6. We have heard both sides and perused the appeal records. In terms of the agreement which the appellant had entered into with their Principal i.e., M/s. DIC Inc. Tokyo, Japan, Royalty become payable as a consideration for transfer of technology, which was to be used by the appellant to manufacture printing ink. The quantification of such Royalty payable is on the basis of the quantum of final product ultimately sold by the appellant. As per the facts of the present case, the appellant in its factory at Transport Depot Road, Kolkata, manufactured concentrates for printing ink; the same is cleared to an another factory of the appellant, where the final product, printing ink, is manufactured and cleared. There is no dispute about the fact that the concentrate for printing ink has also been manufactured using the technology transferred by M/s. DIC Inc., Tokyo, Japan. Hence, we are of the view that the Royalty should form part of the costing of the goods cleared from the appellants factory. But the appellant has claimed that any differential duty, even if paid at the appellants factory, will be available as CENVAT credit at the downstream factory where concentrate are used to manufacture of printing ink. Further, since concentrate is transferred to their own factory, it has been claimed that this is a revenue neutral situation.
7. We find considerable force in the arguments raised by the appellants. The Larger Bench of the Tribunal in the case of Jay Yuhshin Ltd. vs. Commr. Of Central Excise, New Delhi reported in 2000 (119) ELT 718 (Tri.-LB) has held that there is no justification to demand duty from one unit when the same goods are destined for another unit of the same company, since any differential duty paid will be available to the other unit as CENVAT credit. The above decision has also been affirmed by the Honble Supreme Court.
8. By following the above decision, we are of the view that demand of the differential duty is not justified and hence, the same is set aside and the appeal is allowed. 5.2 By following the decision of the Tribunal supra, we allow the appeal to the extent of penalty. The penalty is set aside however, the duty demand as well as interest are upheld as the same are not being challenged in the present proceedings.
6. In the result, the appeal is allowed.
(Order dictated in Open Court on 12/12/2017) V. PADMANABHAN TECHNICAL MEMBER S.S GARG JUDICIAL MEMBER rv...
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