Custom, Excise & Service Tax Tribunal
M/S. Autolite India Ltd vs C.C.E Jaipur-I on 19 March, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. E/323-327/2007 -Ex[DB]
[Arising out of Order-In-Original No. 69-70/2006/Commissioner dated: 10.10.2006 passed by Commissioner of Central Excise Jaipur-I]
For approval and signature:
Hon'ble Mr. Rakesh Kumar, Member (Technical)
Hon'ble Mr. S.K. Mohanty, Member (Judicial)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s. Autolite India Ltd. ...Appellant
M/s. Autolite India Ltd.
Sh. RK Mathur (Chief Manager)
Sh. Mahipal Gupta, Director
Sh. Gopal Mathur, General Manager
Vs.
C.C.E Jaipur-I Respondent
Appearance:
Mr. Rupesh Kumar, Advocate for the Appellants Mr. Yashpal Sharma, DR for the Respondent CORAM:
Hon'ble Mr. Rakesh Kumar, Member (Technical) Hon'ble Mr. S.K. Mohanty, Member (Judicial) Date of Hearing.19.03.2015 FINAL ORDER NO. 50929-50933 /2015-Ex(Br) Per Rakesh Kumar (for the Bench):
The facts leading to filing of these appeals are, in brief, as under:
1.1 M/s Autolite India Ltd., Unit-I, located at Sitapura, is a 100% Export Oriented Unit (EOU). This unit manufactures halogen capsules and Halogen bulbs for export. The second unit-II located at Parwati Nagar, Jaipur, is a DTA Unit which manufactures halogen bulbs. A 100% EOU is entitled to make DTA Clearances in terms of the Foreign Trade Policy which in terms of the para 6.8(a) of the Foreign Trade Policy can be upto 50% of the FOB Value of the exports. The period of dispute in this case is from August 2004 to July 2005 and from August 2005 to February 2006.
1.2 The first point of dispute is regarding assessable value of the halogen capsules cleared by the 100% EOU (Unit-I) to the DTA unit during the above mentioned period. In terms of the provisions of proviso to section 3(1) of the Central Excise Act, 1944, the Central Excise Duty payable on the DTA clearances of a 100% EOU is the aggregate of duties of the Customs leviable on the imports of like goods into India and if the rate of duty is ad-valorem, the assessable value has to be determined under section 14 of the Customs Act, 1962.
1.3 In the present case, the unit -Iof the appellant company (100% EOU) had paid duty, in respect of its DTA clearances, on the FOB price at which the goods were being exported. The Department was of the view that this value, adopted by the appellant is not correct and has determined the value by invoking Rule 7(3) of the Customs Valuation Rules, on the basis of the sale price of the Halogen Bulbs of the DTA Unit. The Halogen capsules cleared into DTA are H312V55W, H312V100W, H324V70W, H424V100/90W, H412V100/90 OB, H412V60/65 OB, H412V35/35W and H412V60/55Blue. The Department has rejected the DTA sale price of these models of Halogen Capsules on the basis of the price at which the Halogen capsules of model H424V75/70W, H412V60/55W, H412V100/90W and H412V100/90W (Gold coated) were imported by the appellant and, thereafter, by applying Rule 7(3) of the Customs Valuation Rules, has determined their DTA sale price on the basis of sale price at which the halogen bulbs manufactured by the Unit-II (DTA Unit) were being sold. It is on this basis that the duty demand of Rs. 42,92,481/- for the period from August 2004 to July 2005 and duty demand of Rs. 28,65,462/- for the period from August 2005 to February 2006 were made by two separate Show Cause Notices.
1.4 In course of search of Unit-I as well as Unit-II of the appellant company on 06.08.2005, from possession of store keeper of the DTA Unit Sh. Satyanarayan, a diary was recovered which contained some entries regarding receipt of halogen tubes from the 100% EOU (Unit-I). Sh. R K Mathur, Chef Manager, in his statement, stated that those quantities had been received from the Unit I without any invoices or duty paying documents. The duty demand of Rs. 14,46,613/- for the period from 14.12.2004 to 05.08.2005 is on this basis.
1.5 Both the SCNs were adjudicated by a common order in original dated 29.09.2006 passed by the Commissioner Central Excise, Jaipur-I by which the above mentioned duty demands totaling Rs. 86,04,556/- were confirmed against Unit-I of the appellant company along with interest on it under section 11AB and beside this while penalty of equal amount was imposed on unit-I of the appellant company under section 11AC, penalty under Rule 26 of the Central Excise Rules, 2002, of Rs. 5 lac was imposed on Sh. Mahipal Gupta, Director of the appellant company, and penalty of Rs. 2 Lac each was imposed each on Sh. Gopal Mathur General Manager of the appellant company and Sh. RK Mathur, Chief Manager of the appellant company. Against this order of the Commissioner these appeals have been filed.
2. Heard both the sides.
3. Sh. Rupesh Kumar, Advocate the Ld. Counsel of the appellant, pleaded that so far as the duty demand of Rs. 14,46,613/- on the basis of the allegation of clandestine removal by the 100% EOU is concerned, this demand is based only on the entries in the diaries recovered from the store keeper of the DTA Unit (Unit-II), Sh. Satyanarayan and the statement of Chief Manager Sh. RK Mathur, that though, the appellant had requested for supply of the copy of the diary containing the entries regarding alleged clandestine removal by 100% EOU (Unit-I) to the DTA Unit (Unit-II), the diary had not been supplied, that merely on the basis of the entries in the diary and the statement of the Chief Manager, Sh. RK Mathur, the duty demand cannot be confirmed against the unit-I, that there is no evidence in support of the allegation of under valuation of the DTA Clearances, that the appellant throughout during the period of dispute have paid duty in respect of their DTA clearances on the FOB price at which the goods were exported, that this price is comparable with the price at which other importers have made imports of similar Halogen Capsules during the same period in comparable quantities, that the evidence in this regard had been produced before the Commissioner but he has not given any finding, that the Commissioner has rejected the value of the DTA clearance on which the duty was paid by the appellant company by comparing the assessable value with the price at which certain types of halogen capsules had been imported by the appellant, that the price at which the halogen capsules had been imported by the appellant is not comparable with the price at which the duty was paid by the appellant in respect of their DTA clearances, as the quantity of the goods cleared into DTA ,which is in Lakhs, is not comparable with the quantity of similar halogen capsules imported by the appellant as samples, that while the quantity of halogen capsules imported by the appellant as samples was from 200 to 500, the quantity of the goods cleared into DTA is in Lakhs, that 9576 gold coated halogen capsules whose price has been adopted by the Department for comparison are not even manufactured by the appellant, that the Department has determined the value of the halogen capsules on the basis of the sale price of the halogen bulbs being manufactured and sold by the DTA unit by reverse calculation by applying rule 7(3) of the Customs Valuation Rules, that Rule 7 is not applicable in this case as unit-II is not manufacturing halogen capsules, that in any case, when the price of contemporaneous import of halogen capsules in comparable quantity is available and the same is comparable with the DTA sale price adopted by the appellant, there would be no justification for rejecting the same, and that in view of this the duty demand based on the allegation of under valuation of DTA sale price is not sustainable.
4. Sh. Yashpal Sharma, the Ld. DR, defended the impugned order by reiterating the findings of the Commissioner.
5. We have considered the submissions from both the sides and perused the records. Unit-I of the appellant company is a 100% EOU and is engaged in the manufacture of halogen capsules and halogen bulbs. Unit-II of the appellant company is DTA Unit as is engaged in only in the manufacture of halogen bulbs. During the period of dispute i.e. form August 2004 to July 2005 and from August 2005 to February 2006 Unit I had made DTA clearances of Halogen capsules to its DTA Unit and the duty on DTA clearances was paid at FOB price at which the same were being exported. According to the Department the assessable value adopted by the appellant in respect of their DTA sale is not acceptable and has to be rejected as this price is much lower than the price at which the appellant had imported halogen capsules of model H424V75/70W, H412V60/55W, H412V100/90W and H412V100/90W (gold coated). After rejecting the assessable value adopted by the unit-I of the appellant company, the Department has determined the assessable value by applying rule 7(3) of the Customs Valuation Rules 1988 on the basis of the sale price of the halogen bulbs manufactured by the DTA Unit by reverse calculation. The appellants contention is that during the same period, other importers in India were importing similar goods in comparable quantity at the prices which were comparable with the DTA sale price adopted by the Unit I. It is also the contention of the appellant that the price at which the Unit-I (100% EOU) had imported halogen capsules cannot be adopted for the purpose of DTA Sales as that price was for import of only 200 to 500 capsules and the price of gold coated halogen capsules imported by Unit-II was not relevant a gold coated halogen capsules wer not being manufactured by Unit-I.
6. In terms of the provisions of proviso to section 3(1) of Central Excise Act, 1944, while the duty payable in respect of the goods cleared by a 100% EOU into DTA is the aggregate value of duties of customs on import of like goods into India, the assessable value for this purpose is to be determined under section 14 of the Customs Act, 1962. Therefore, the assessable value of the goods cleared into DTA must be comparable with the contemporaneous import price of identical goods or similar goods into India in comparable quantity.
7. In our view, the Department was not correct in adopting the price at which the unit-I had imported 200 to 500 halogen capsules as sample as the quantum of DTA sales being made by the 100% EOU was much larger and in this regard, the import price of gold coated Halogen Capsules was not relevant as the 100% EOU (Unit-I) was not manufacturing such halogen capsules. Moreover, in terms of the information furnished by the appellant, contemporaneous import of similar goods in comparable quantity had been made at the prices which were comparable with the DTA sale price adopted by the appellant unit. However, we find that the Commissioner has not given any finding on this plea. We are, therefore, of the view that the impugned order rejecting the DTA sale price of the appellant unit is not correct and the same has to be set aside and the matter has to be remanded to the Commissioner for de novo adjudicated after considering the appellants plea that during the period of dispute, other importers had imported similar goods in comparable quantities at the prices which were comparable with the DTA prices adopted by them and if this is so, there would be no justification for rejecting the DTA sale price on which the duty had been paid by the appellant.
8. As regards the duty demand of Rs. 14,46,613/- against the unit-I based on the allegation of clandestine removal, this demand is based on entries in the diary recovered from the store keeper, Sh. Satyanarayan, of the DTA Unit. The grievance of the appellant is that the photocopy of this diary has not been supplied to them. In view of this, we hold that this duty demand is also not sustainable and the matter has to be remanded to the Commissioner for de novo adjudication after supplying a copy of this diary to the appellant, and taken into account their submissions in respect of the same.
9. The impugned order is, therefore, set aside and the matter is, therefore, remanded for de novo adjudication as per our directions in the order. In course of de novo adjudication, any other legal points raised by the appellants may also be considered.
(Dictated and pronounced in open court) (Rakesh Kumar) Member (Technical) (S.K. Mohanty) Member(Judicial) Neha Page | 2