Madras High Court
The Commissioner Of Central Excise vs M/S. Tenneco Rc India Private Ltd on 19 June, 2015
Author: R. Sudhakar
Bench: R. Sudhakar, K.B.K. Vasuki
In the High Court of Judicature at Madras
Date :: 19..06..2015
Coram ::
The Hon'ble Mr. Justice R. Sudhakar
and
The Hon'ble Ms. Justice K.B.K. Vasuki
C.M.A. No: 976 of 2009
The Commissioner of Central Excise
Chennai IV Commissionerate
692 MHU Complex, Anna Salai,
Nandanam
Chennai 600 035. ... Appellant
-vs-
1. M/s. Tenneco RC India Private Ltd.
No: 122, SIPCOT Industrial Complex
Hosur 635 126.
2. The Customs, Excise and Service
Tax Appellate Tribunal
South Zone Bench
Shastri Bhawan Annexe
1st floor, 26, Haddows Road
Chennai 600 006. ... Respondents
.. .. ..
Civil Miscellaneous Appeal under Section 35 G of the Central Excise Act, 1944 to set aside the impugned order passed by the Tribunal in Final Order No: 772/08 dated 28.07.2008 and restore the Order in appeal by allowing this appeal.
For appellant : No appearance
For 1st resp. : Mr. V. Balasubramanian
2nd resp. : Tribunal
.. .. ..
J U D G M E N T
( Judgment of the Court was delivered by R. Sudhakar, J.) Aggrieved by the order of the Tribunal in allowing the appeal filed by the assessee, the Revenue/appellant is before this Court by filing the present appeal. This Court, vide order dated 16.5.2009 admitted the appeal on the following substantial questions of law :-
" Whether on facts and circumstances of the case, the 2nd respondent Tribunal was right in holding that revenue neutral situation as the reason for allowing the 1st respondent's appeal irrespective of the fact that the 1st respondent has wilfully suppressed the maintenance of dual accounting system and non-inclusion of profit marging int he assessable value of semi-finished goods cleared to their other unit ?
2. The assessee is a manufacturer of shock absorbers falling under Chapter Heading 8708 and 8714 of the CETA, 1985. They have two more manufacturing units at Pondicherry and Guargaon besides the unit at Alandur, Chennai. The Unit at Alandur cleared shock absorber elements on payment of duty and certain types of shock absorber elements in semi-finished condition to their sister Unit at Gurgaon on stock transfer basis which were ultimately sold to M/s. Maruthi Udyog Ltd. after adding items like spring, dust covers, etc. As the goods are in a semi-finished condition and were not of comparatable nature, for the purpose of determining assessable value, valuation was resorted to under Rule 6(b) (ii) of Central Excise (Valuation) Rules, 1975 based on cost construction method. On verifiction, it was noticed that no profit marging was included for the purpose of arriving at the assessable value and since it was projected as if the unit was incurring losses consistently, proceedings in the form of show cause notice were initiated against the assessee demanding differential duty. After following the due process of law, the adjudicating authority, vide the order in original, confirmed the duty amount of Rs.3,31,115/- payable for the period 1996-97 under the erstwhile Rule 9(2) of CER 1944 read with sub section (1) of CEA 1944, imposed equal penalty under Section11 AC of CEA 1944 and appropriate interest under Section 11 AB of CEA, 1944 was also demanded. Aggrieved by that order, the assessee filed an appeal.
3. The Commissioner (Appeals), vide his order dated 25.06.2007 made in No: 66/2007 (M-IV) confirmed the demand order along with interest made by the adjudicating authority. Challenging the said order, the assessee approached the Tribunal. By its order dated 23.07.2008 made in Appeal No: E/657/2007, the Tribuanl allowed the assessee's appeal and hence, the Revenue is before this Court in this Civil Miscellaneous Appeal.
4. When this matter is taken up for hearing, it is brought to the notice of this Court by the learned counsel appearing for the parties that similar question has been considered by the Gujarat High Court in the case of Commissioner of Central Excise and Customs, Vadodara II, vs. Indeos Abs Ltd. reported in 2010 (254) E.L.T. 628 (Gujarat) and the issue raised was answered in favour of the assessee. It is not in dispute that, in an identical matter where a similar issue was raised, the Supreme Court, in the case of Nirlon Ltd. vs. Commissioner of Central Excise, Mumbai, reported in 1015 (TIOL) 96 SC CX, affirmed the view taken by the concerned High Court. The relevant paragraphs of the order reads thus, 7. We have ourselves indicated that the two types of goods were different in nature. The question is about the intention, namely, whether it was done with bona fide belief or there was some mala fide intentions in doing so. It is here we agree with the contention of the learned senior counsel for the appellant, in the circumstances which are explained by him and recorded above. It is stated at the cost of repetition that when the entire exercise was revenue neutral, the appellant could not have achieved any purpose to evade the duty.
8. Therefore, it was not permissible for the respondent to invoke the proviso to Section 11 A (1) of the Act and apply the extended period of limitation. In view thereof, we confirm the demand insofar as it pertains to show cause notice dated 25.2.2000. However, as far as show cause notice dated 03.03.2001 is concerned, the demand from February, 1996 till February 2000 would be beyond limitation and that part of the demand is hereby set aside. Once we have found that there was no mala fide intention on the part of the appellant, we set aside the penalty as well.
5. In view of the said statement made by the learned counsel on either side that the ratio laid down by the Supreme Court in Nirlon Ltd. case cited supra, is applicable to the case on hand, the substantial R. Sudhakar, J.
and K.B.K. Vasuki, J.
question of law is answered in favour of the assessee/respondent and against the Revenue/appellant.
6. Accordingly, the civil miscellaneous appeal fails and the same is dismissed. However, in the circumstances of the case, there shall be no order as to costs.
(R.S.J.)(K.B.K.V.J.)
gp 19..06..2015
To
The Customs, Excise and Service
Tax Appellate Tribunal
South Zone Bench
Shastri Bhawan Annexe
1st floor, 26, Haddows Road
Chennai 600 006.
C.M.A. No: 976 of 2009