Customs, Excise and Gold Tribunal - Mumbai
Raymond Ltd. And Premal Icchaporia vs Commissioner Of Central Excise And ... on 20 October, 2000
Equivalent citations: 2001(73)ECC517
ORDER J.H. Joglekar, Member (T)
1. On hearing the appellant assessee on their stay applications, in Order No. C-IV 2339-40/WZB/2000 dated 21.8.2000 the bench observes as under:
The appellants manufactured "other woven fabrics of synthetic staple fibre" which was cleared without payment of duty to their sister units situated elsewhere. The determination of value was done in terms of Rule 6(b)(ii) which read as follows:
6(b) where the excisable goods are not sold by the assessee but are used or consumed by him or on his behalf in the production or manufacture of other articles, the value shall be based,
(i) On the valve of the comparable goods produced or manufactured by the assessee or by any other assessee; provided that in determining the value under this sub-clause, the proper officer shall make such adjustments as appear to him reasonable, taking into consideration all relevant factors and in particular, the difference, if any, in the material characteristics of the goods to be assessed and of the comparable goods;
(ii) If the value cannot be determined under Sub-clause (i), on the cost of production or manufacture including profits, if any, which the assessee would have normally earned on the sale of such goods.
2. The assessee added 3.34% as notional profit. The case of the department was that the profit earned by the entire textile division should be added in such computation. This profit was determined of 30.79%. Show cause notice was issued alleging that the result of the suppression of the profit margin was the evasion of duty to the extent of Rs. 4,02,73,918. The Commissioner, after hearing the assessees passed the orders adopting the rule of thumb and adding 10% profit on the total cost. As a result, the amount confirmed as duty by him was Rs. 97,20,483. He confirmed this amount and also imposed a penalty of like amount on the assessee unit and of Rs. 50,000 on Shri Premai Icchasporia. Against this order, the appeals were filed and the present applications.
3. We have heard Shri Prakash Shah for the applicants and Smt. Arya, SDR for the Revenue.
4. We have heard Shri Prakash Shah on computation as well as on the aspect of limitation. The method and manner of calculation of the profit referred to in the said sub-rule has formed the basis in a number of judgments. Profits can be sub-divided into gross profit, net profit etc. as per the terms. Similarly, profit scan be computed for the entire company or for individual divisions of the same company. It is to be determined as to which figure based on the multiple alternatives relates for the sale of material. Since this question has been decided in a number of cases, we direct Shri Prakash Shah to compile a compendium of the case laws on this subject. For this purpose, the cases are adjourned to 19.9.2000. Meanwhile, the Revenue shall not take any coercive action to recover the amounts confirmed.
2. Today when the hearing was resumed on the applications, Shri Prakash Shah learned counsel submitted a set of judgments on the issue of the quantum of profits to be added in a situation covered under Rule 6(b)(ii). We have seen the various judgments. We find that the following judgments merely pronounce the adequacy of the quantum determined by the lower authority without going into the issue as to what was the correct quantum.
(1) Diesel Locomotive Works v. CCE 1999 (34) RLT 240 (T). (2) Apollo Zipper Co. Pvt. Ltd. v. CCE (3) Food Specialities Ltd. v. CCE .
In the following judgments we find no ratio arising as would guide us in determining the issue:
(1) Dhrangadhara Chemical Works Ltd. v. CCE (2) CCE v. Bimetal Bearing Ltd.
In the following cases it was held that the origin of profit achievable on specific goods should be taken into account or computed and that the profit earned by the unit as a whole is not material:
(1) I.T.C. Ltd. v. CCE 1999 (32) RLT 440 (T) (2) National Litho Press v. CCE In the following cases it was held that the profits shown by the balance sheet could be adopted. (1) Kanoria Chemical Industries v. CCE (2) CCE v. Bimetal Bearing Ltd.
In the judgment of West Coast Paper Mills Ltd. v. CCE directions were made for adoption of gross profit of the whole unit. In the judgment of CCE v. Assam Timber Treating Works the issue involved was the reduction of the margin from 10% as adopted by the lower authority to 5% by the appellate authority. The issue was remanded and therefore no ratio is available from this judgment.
3. We thus find that in spite of the existence of a number of judgments on this aspect, there is no specific ratio arising out of them.
4. The main issue is the language of the subject rule. It makes for a projection of an eventuality which is bound never to arise.
5. In this situation we deem it proper to refer this issue to the Hon'ble President of the CEGAT with the request that it be placed before the Larger Bench for disposal and decision. As an interim order we waive pre-deposit of the duty confirmed and the penalties imposed.