Custom, Excise & Service Tax Tribunal
M/S Wenger And Company vs Cce, Delhi-I on 9 September, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing: 10.8.2016
Date of Pronouncement: 9.9.2016
Appeal No. E/805-806/2008-Ex.(DB) with
E/Misc./50740/2016
(Arising out of Order-in-Original No. 05/2008 dated 26.2.2008 passed by the Commissioner, Central Excise, Delhi-I)
M/s Wenger and Company Appellant
Shri Atul Tandon, Partner
Vs.
CCE, Delhi-I Respondent
Appearance Dr. Prabhat Kumar, Advocate - for the appellant Shri Amresh Jain, D.R. - for the respondent CORAM: Honble Mr. Justice (Dr.) Satish Chandra, President Honble Mr. Ashok K. Arya, Member (Technical) Final Order No. 53561-53562/2016 Per Ashok K. Arya :
1. Heard both sides.
2. The main issues involved in the case are :
(i) Valuation of goods and admissibility of benefit of exemption Notification No. 8/2003-CE dated 1.3.2003;
(ii) Invocation of extended period of limitation;
(iii) Levy of penalty.
3. The appellants have been represented by the ld. Advocate Dr. Prabhat Kumar and the Revenue has been represented by ld. AR Shri Amresh Jain.
4. The impugned order passed by the Commissioner, Central Excise, Delhi has confirmed the Central Excise duty of Rs.1,23,69,254/- along with interest; and equivalent penalty has also been imposed on the main appellant M/s Wenger and Company and additional penalty of Rs. 5 lakhs imposed on Shri Atul Tandon, partner of the appellant No. 1, M/s Wenger and Company.
5. The ld. Advocate Dr. Prabhat Kumar on behalf of the appellants at the strength of written submission submits that:
(A) The valuation and denial of benefit of exemption Notification No. 8/2003-CE dated 1.3.2003:
(i) Retail prices charged to customers in the shop cannot be taken as the transaction value under Section 4 of Central Excise Act, which provides for assessment on wholesale price.
(ii) Intimation have been sent on valuation of goods.
(iii) Regular returns being filed giving all the details of goods manufactured etc.
(iv) Total turnover of items includes excisable and non excisable goods which are subject to central excise levy. Average of percentage of non excisable goods is over 40%, not liable to be included in the turnover.
(v) Figures in balance sheet include non-excisable and non dutiable goods and balance sheet cannot be used as a base for the purpose of raising demand of Central Excise duty.
(vi) Valuation has to be taken not at retail price, but for wholesale price or under valuation Rules. This would substantially reduce the turnover.
(vii) Turnover of non excisable goods and excisable goods exempted from central excise duty has to be excluded as per Notification, the total value is between 40-50% of total turnover. Reliance is placed on the following case i.e. CCE, Pondicherry Vs. ACER India Ltd. 2004 (172) ELT 289 (SC). (B) Invocation of extended period of limitation:
(i) No suppression of facts There are numerous letters and correspondence between the appellant and department, there is no question of suppression of facts.
(ii) Reliance is placed on following case laws:
(a) Pahwa Chemicals Pvt. Ltd. Vs. CCE, Delhi 2005 (189) ELT 257 (SC).
(b) Tamil Nadu Housing Board Vs. Collector of Central Excise, Madras 1994 (74) ELT 9 (SC).
(c) Uniworth Textiles Ltd. Vs. CCE, Raipur 2013 (288) ELT 161 (SC).
(d) Nizam Sugar Factory Vs. CCE- 2006 (197) ELT 465 (SC).
(e) CCE, Mumbai Vs. Damnet Chemicals Pvt. Ltd. 2007 (216) ELT 3 (SC).
(f) Anand Nishikawa Co. Ltd. Vs. CCE, Meerut- 2005 (188) ELT 149 (SC).
(g) CC, Mumbai Vs. M.M.K. Jewellers 2008 (225) ELT 3 (SC).
(C) Levy of penalty:
(i) The appellant did not wilfully contravene any provisions of Central Excise law; there is no mens rea, therefore, no penalty is imposable.
(ii) Reliance is placed on the following cases:
(a) 2005 (187) ELT 489 P.V. Ukkru International Trade Vs. CC, Cochin.
(b) 2005 (182) ELT 59 CCE, Chandigarh Vs. Pilot Products.
(c) 2005 (18) ELT 140 Arya Filaments (P) Ltd. Vs. CCE, Indore.
6. The ld. AR Shri Amresh Jain representing the Revenue has reiterated the findings given by the lower authorities.
7. We have carefully considered all the facts along with submissions of both sides and the case laws cited.
8. We shall consider and decide on the issues involved in the following paras.
8.1 Valuation & Eligibility to claim benefit of Notification No. 8/2007-CE (supra): - The appellant pleads that the department added the value of even non-excisable goods and exempted excisable goods which are to be excluded as per the Notification No. 8/2003-CE. In this regard, we observe that the assessee/appellant is correct that for deciding on the eligibility of exemption Notification No. 8/2003-CE the turnover is to be computed after excluding the value of non excisable and exempted excisable goods. Revenue has to follow this principle that value of non-excisable and non exempted goods are not to be added when the turnover is computed to decide on the entitlement to benefit of Notification No. 8/2003-CE.
8.1.1 The assessee has been manufacturing various kind of items and some of these items may not have the facility of abatement under Central Excise law. Assessable value has to be determined by reducing the sale price in such a manner so as to arrive at the price on which the manufacturer would have sold the said goods in wholesale. In this regard, we take the support from CESTAT Kolkata decision in the case of Macneill Engineering Ltd. Vs. CCE 2001 (134) ELT 173 (Tri.-Kolkata). It is to be noted that value has been defined in Explanation (c) to the Notification No. 8/2003 (supra); therefore, total turnover to decide on eligibility is to claim benefit of Notification No. 8/2003 (supra) to be computed by totalling the value of specified goods only.
8.1.2 It was pleaded by the assessee/appellant that Revenue has taken retail price in transaction value without giving them the benefit of abatement. The submission of the assessee for giving them the benefit of abatement is correct; and assessable value of excisable items being manufactured by the assessee/appellant is to be arrived at after giving them the benefit of abatement. The ld. Advocate for the appellants have referred to a copy of Notification No. 14(NT) dated 1.3.2008 claiming the facility of abatement, whereas the goods have been assessed at the retail sale price of subject items. This aspect has not been discussed by the lower authorities, when it is so then the department has to consider/give abatement as admissible for the goods being manufactured by the assessee before arriving at the liability of central excise duty against the assessee. The matter, therefore, deserves to be remanded to the original adjudicating authority for deciding afresh the liability of Central Excise duty of the appellant unit after calculating the correct turnover (i.e. after deducting the value of non-excisable and exempted excisable goods) and further after giving the benefit of abatement as applicable in respect of the items manufactured, which are under abatement facility. Proper opportunity of being heard shall be provided to the appellant as per law.
8.2 Invocation of extended period of limitation: From the facts on record and after having gone through the submissions of the appellants, it is clear that the Revenue has been in the knowledge of the things since the very beginning. The assessee has been in correspondence with the department since the year 1998. The assessee has given numerous letters to the Revenue on the problems faced by them in respect of payment of Central Excise duty; for example assessees letter dated 2nd April, 1998 to the Commissioner requesting the department to allow suitable deductions from the retails price as per Rule 6(9) of Valuation Rules. The assessee has also been filing regular returns with the department on the goods manufactured. Consequently, it is established that there has not been any suppression of facts or wilful misstatement on the part of the appellants. Therefore, for the present facts law of Central Excise does not permit the Revenue to invoke extended period of limitation. In other words, Deptt. cannot issue demand for the period beyond one year from the relevant date, which is the date of Show Cause Notice (SCN). Therefore, demand for the period beyond one year is set aside and demand for the period of one year preceding the relevant date which is 29.12.2006, the date of SCN, is sustained. In this regard, our view is reinforced by the Honble Supreme Courts decisions in the cases of Pahwa Chemicals (supra), and Tamil Nadu Housing Board (supra) and Uniworth Textiles (supra).
8.3 Levy of penalty: From the facts on record and the submissions of the appellants, it is clear that the appellant No. 2 Shri Atul Tandon, partner in the appellant No. 1 firm has not knowingly been involved in any manner in contravention of laws of Central Excise with reference to the subject goods making the said goods liable to confiscation under the law of Central Excise. Therefore, the penalty of Rs. 5 lakhs imposed on the appellant No. 2 Shri Atul Tandon, partner of the appellant No. 1 assessee under Rule 26 of Central Excise Rules, 2002 is hereby set aside.
9. The Revenues Show Cause Notice (SCN) is dated 29.12.2006 and total demand issued is of Rs.1,23,69,254/- for the total period of 2001-2002 to 2006-2007. The net effect of this order is that the demand for the period beyond one year from the date of SCN, which is 29.12.2006, is set aside. The demand for one year period has been confirmed, which needs quantification in the light of our findings, observations and conclusions given in this order. For quantification of the demand of one year and for imposition of penalty, if any, on this account against the appellant No. 1 M/s Wenger & Company, the matter is remanded to original adjudicating authority, Commissioner, Central Excise, Delhi-I, who shall do so within three months of receipt of this order after giving opportunity of personal hearing to the appellant No. 1.
10. The penalty imposed on appellant No. 2, Shri Atul Tandon has been dropped; his appeal is hereby allowed.
11. These appeals have been decided in above terms. The Misc. application filed by the appellants is also hereby disposed off accordingly.
(Pronounced in Court on 9.9.2016) (Justice (Dr.) Satish Chandra) President (Ashok K. Arya) Member (Technical) RM 9