Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Central Excise vs Hawk Engines on 3 August, 2001
Equivalent citations: 2001(134)ELT496(TRI-CHENNAI)
ORDER S.L. Peeran, Member (J)
1. This Revenue appeal is against the Order-in-Original No. 32/96 dated 19-8-1996 by which the Commissioner has dropped the demands raised in the show cause notice to an extent of Rs. 7.30 lacs under proviso of Section 11A(1) of the Central Excises Act. The allegation made in the show cause notice was that the assessee had wilfully suppressed the fact of receipt of extra money consideration of Rs. 29.20 lacs and thus evaded payments of duty in terms of various Central Excise Rules.
2. The assessee had produced a MOU reached between them and their Principals that is TVS on 1-7-1993 by which this amount was agreed to be paid by TVS as compensation for the business which would have accurred to them if TVS would not have set up their own unit for manufacturing the magnetos as well as for carrying out certain modifications in the tooling, which could not be utilised because of the setting up of TVS facility; that the amount denoted the compensation for 3 years period prior to the date of payment of the compensation and was not part of the invoices raised by them; that it was paid as lumpsum and not related to any magnetos supplied during the three years; that against the agreed amount, a sum of Rs. 10 lacs was paid on 12-5-1993 and the balance was to be paid in instalments on or before 15-9-1993. The paras 8 to 10 of original order are extracted below :
"8. On merit, in the case of Fresh Springs [1991 E.L.T. 333 (T)], the Tribunal has held that compensation for non-performance may be an income or profit but cannot be treated as the price for the goods. In this regard they relied upon the decision of the Apex Court in the case of Indian Oxygen [1998 (36) E.L.T. 30 (S.C.)] in which it was held that any income either in the shape of interest on deposits, notional or real, may be earned on the deposit for the safe return of cylinders, or any rental would be though ancillary but would not be the price for the manufacture. These might be profits or gains, if any, of any ancillary or allied venture.
9. Further, the payment of Rs. 29.20 lacs by TVS to Hawk was a compensation for the loss sustained on account of the reduction in volume of off take of magnetos and included the amount of Rs. 1.2 lacs paid as reimbursement towards the tool modification. Neither the agreement states nor the notice alleges that this compensation was related to the any or all magnetos already cleared. Hence, it is not possible to allocate the quantum of compensation to a particular quantity of the magnetos to how much was the additional consideration on each magneto.
10. In view of the above, there is no case for treating the amount of Rs. 29.20 as additional consideration on the magnetos supplied by Hawk to TVS. Since Hawk did not suppress any material information from the Department, there is no case for invocation of proviso to Section 11 A(l) of the Act."
3. Ld. DR refers to the various grounds and contends that the amounts were paid towards tooling charges as referred in the show cause notice. He refers to various grounds made in the appeal memo and submits that these were paid for manufacturing the items as alleged in the show cause notice.
4. On our careful consideration and perusal of the entire records of the case, we are satisfied that the Commissioner had carefully scrutinised the material on record and has rightly held that what was paid by TVS to the assessee was only compensation amount and that there was no relationship with the assessable value or price of goods manufactured by the assessee. The Commissioner has also relied on judgments of the Tribunal and that of the Apex Court rendered in the Indian Oxygen Ltd. v. Commissioner of Central Excise, in 1988 (36) E.L.T. 730 (S.C.). We do not find any other citations placed by the revenue to discharge their burden against the Commissioner's findings. The finding has been correctly arrived at and there is no reason to differ from the same. Further the judgments cited have been correctly followed. There is no merit in this appeal and hence the same is rejected.