Custom, Excise & Service Tax Tribunal
M/S Sdl Auto Pvt. Limited vs Cce, Delhi-Iv on 17 January, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI.
Date of Hearing/decision: 17.01.2013
Honble Ms. Archana Wadhwa, Member (Judicial)
Honble Shri Sahab Singh, 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.
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3
Whether Their Lordships wish to see the fair copy of the Order?
Yes
4
Whether Order is to be circulated to the Departmental authorities?
Yes
Excise Appeal Nos. 2490 -2491 of 2006
(Arising out of order in original No. 01/KKJ/Adjn/2006-07 dated 21.04.2006 passed by the Commissioner of Central Excise, Delhi-IV)
M/s SDL Auto Pvt. Limited Appellant
Shri Deepak Adlakha
Vs.
CCE, Delhi-IV Respondent
Appearance: Rep. by Shri B. L. Narasimhan, Advocate for the appellant Rep. by Shri R. K. Verma, AR for the respondent.
CORAM: Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri Sahab Singh, Member (Technical) F. O. No. 55440 55441 / 2013 Per Sahab Singh These appeals have been filed by M/s SDL Auto (main appellant) and Sh. Deepak Adlakha, Head (Operations) against the order in original No. 1/KKJ/Adj/2006-07 dated 21.04.2006 passed by Commissioner, Central Excise, Delhi-IV. Brief facts of the case are that the appellants are manufacturer of sheet metal component and frames falling under Chapter heading 94 of the Central Excise Tariff. As a result of investigation by the department it was found that they were indulging in suppression of assessable value by not adding the value of inputs received free of cost from their buyer and also amortization cost on tooling in the assessable value of the final product. The appellants were manufacturing sheet metal components and frames and supplying to M/s Lear Sheeting Pvt. Ltd. (LSPL) on payment of duty without adding value of items supplied free of cost by their buyer. Accordingly, a show cause notice was issued by the Additional Director General, DGCEI, New Delhi vide F. No. 4/INT/DGCEI/HQ/04/73 dated 04.01.2005 demanding the duty amounting to Rs. 65,55,811/- (Rs. 63,97,441/- on components received free of cost and Rs. 1,58,371/- on account of amortization) for the period 01.12.99 to 30.11.2004 under Section 11A of the Central Excise Act and also proposing imposition of interest and penalty under Section 11AC of the Act, Rule 173Q of the erstwhile Central Excise Rules read with Rule 25 of the Central Excise Rule 2001. Shri Deepak Adlakha, Head Operation was also issued show cause notice for imposition of penalty under Rule 209A of the erstwhile Central Excise Rule read with Rule 26 of the Central Excise Rule, 2001 for master minding the evasion of the duty by the manufacturer. The show cause notices were contested by the noticees and the Commissioner vide the impugned order has confirmed the demand against the main appellant holding that the value of items supplied free of cost and cost on account of amortization is to be added in the assessable value and penalty equal to the duty amount was also imposed on the appellant and penalty of Rs.10,000/- was imposed on Sh. Deepak Adlakha under Rule 209A of the Central Excise Rule.
2. Ld. Advocate appearing for the appellants submits that there is no case of any duty liability arising against them as they are covered by the provision of Rule 4(5)(a) of the Cenvat Credit Rules and Rule 57F/ 57AC(5)A. Under these provisions the goods can be supplied to job worker for further processing activity and can be received back by them from the job worker for further use in the manufacture of final product. He submits that from April 2000 Rule 57AC (5A) of Central Excise Rule and Rule 4(5)(a) of the Cenvat Credit Rules dealt with provisions for sending the inputs for getting intermediate goods manufactured from a job worker and the provision under these Rules 57AC(5A)/Rule 4(5)(a) are similar to the erstwhile Rule 57F(4) with regard to sending of material for further processing to the job worker and to receive it back within 180 days. He submits that in the present case a principal manufacturer has followed the job work procedure under Rule 57F/57AC/Rule 4(5) for sending the inputs to the appellants under different challans for getting the intermediate products manufactured. Since the entire transactions are covered under provision of Rule 4(5)(a)/ 57AC and 57F, no duty demand can survive against the appellants. In support of his contention he relies upon the decision of Honble Supreme Court in case of International Auto Ltd. reported in 2005 (183) ELT 239 (SC) wherein it was held by the Honble Court that the job worker is not liable to pay the duty on inputs supplied by the final product manufacturer as it had not taken credit for modvat in respect of inputs. He submits that their case is squarely covered by the International Auto and therefore, their appeals need to be allowed.
3. He also submits that demand in this case has been raised on 04.01.2005 demanding the duty from the financial year 1999 to 2004 on the ground of suppression of fact and as a matter of fact there was not any suppression on the part of the appellant. He submits that entire facts were well within the knowledge of the department and their central excise records have been audited by the Central Excise Officer from time to time and therefore the charge of suppression is unsustainable in law. Moreover, the appellants had worked under the bonafide belief that goods produced by them on job work basis under the provision of Rule 57AC (5) and Rule 4(5)(a) are not liable to duty, therefore, the extended period is not invokable.
4. Ld. DR appearing for the Revenue reiterated the finding of the lower authority and submits that this is a fact that some of the material was supplied free of cost by the buyer of the goods to the appellants and cost of this material was not added in the assessable value by the appellant. Therefore, the Commissioner has rightly confirmed the demand holding addition of value of those materials in the assessable value of the products manufactured by the appellants. He, therefore, submits that their appeal needs to be rejected.
5. After hearing both the sides we find that the Commissioner in the operative part of the order in para 1 has held as under:-
(i) I confirm the invocation of the extended period for the recovery of central excise duty under Section 11A (1) proviso of the Central Excise Act, 1944.
6. We find that appellants have raised the ground of time bar against the issue of show cause notice in the present appeals. It is the contention of the appellants that they were regularly filing the RT-12 return with the department with regard to goods manufactured by them including those manufactured on job work basis for the principal manufacturer. The goods have been brought under Rule 57F challans only and they were maintaining all the records in their factory. They also submitted that their factory was periodically audited by the Officers of the excise department in support of which they have submitted the documents confirming the audit of the unit by the officers of the department. It is the contention of the appellants that during the audit the officers have processed each and every piece of information in the instant case. Since all the facts and information were available to the officers of the department there is no question of suppression of any information from the department and, therefore, the extended period under Section 11A is not applicable to their case.
7. After going through the impugned order, we find that the Commissioner in para 27 of the order has distinguished three cases cited by the appellants in support of their contention that the show cause notice is time barred. The Commissioner in para 27 of the order has held that these decisions are not of any help to the appellants.
8. In para 28 of the impugned order the Commissioner on the plea of M/s LSPL that the demand is time barred as all the Returns, invoices were filed by them before the departmental officers and the factory was visited by the audit officer, held that it is not clear whether the audit had in fact examined this issue or not and unless that point is clarified it cannot be examined whether or not the visit by the audit would indeed make a difference and Commissioner concluded that there was wilful suppression on the part of the appellants to evade the payment of excise duty.
9. We find from the record that RT-12 returns/ ER-1 returns were regularly being filed by the appellants to the department. We also take note of the fact that appellants were regularly being audited by the Central Excise officers and no objection on the issue of free supply of goods by the principal manufacturer as well as on amortisation cost was raised by the audit during their visits. It is not the case of the department that the documents/ RT-12 returns and other records were not submitted to the officers of the audit team by the appellants. Once the officers have audited the records they were supposed to examine each and every issue in respect of appellants for the audit period. We, therefore, do not agree with the finding of the Commissioner that it is not clear whether audit had in fact examined this issue or not. Once the officers have conducted the audit periodically during the period involved in the show cause notice and had not raised any objection on the issues involved in the appeal, we are of the view that suppression on the part of the assessee cannot be invoked in the present case. Accordingly, the extended period as provided under Section 11A of the Central Excise Act will not be applicable in the present case.
10. We find the show cause notice in this case has been issued on 04.01.2005 and the duty has been demanded for the period 01.12.1999 to 30.11.2004. In para 19 of the show cause notice it is mentioned that details of demand are given in RUDs 18 and 19. After going through the RUDs 18 and 19 we find that these are the charts prepared by the department for the period 1999-2000 to 2003-2004. There is no mention of anything after the period 2003-2004. Therefore, the date 30.11.2004 mentioned in the show cause notice is not correct as both the RUDs 18 and 19 are upto the period 2003-2004. We also note that in the RUDs 18 and 19 the total value is given financial yearwise and there is no mention about the break -up of each financial year about the clearances made during the one financial year. In absence of which it cannot be held whether there was any clearance made after 04.01.2004 by the noticees since the show cause notice was issued on 05.01.2005. We find the demand issued in the show cause notice beyond the period of one year is completely time barred. Since we are not able to find from the RUDs 18 and 19 any clearances after 04.01.2004, we hold that entire show cause notice is hit by time limitation. Accordingly, we set aside the order-in-original on the ground of time limitation only without going into the merits of the case. Since there is no duty demand on the appellants, we also set aside the penalties imposed on the appellants in the impugned order.
11. Accordingly, we allow the appeals.
(Archana Wadhwa) Member (Judicial) (Sahab Singh) Member (Technical) Pant