Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs D.B. Technologies Pvt. Ltd on 25 September, 2008
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL Nos. E/2058/03 & E/3422/06 (Arising out of Order-in-Appeal No. PII/BKS/118/2003 dated 22.4.2003 passed by Commissioner of Central Excise & Customs (Appeals), Pune-II and Order-in-Original No. 32-56/ASR/2005-ADJ dated 27.9.2005 passed by Commissioner of Central Excise, Pune-III) For approval and signature: Hon'ble Ms. Jyoti Balasundaram (Vice President) and Hon'ble Mr. A.K. Srivastava, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No 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 : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Commissioner of Central Excise, Pune-II Appellant Vs. D.B. Technologies Pvt. Ltd. Respondent D.B. Electronics Pvt. Ltd. Appearance: Shri S.M. Vaidya, Authorised Representative (JDR), for appellant Shri A.G. Kulkarni, C.A., for respondent CORAM: Hon'ble Ms. Jyoti Balasundaram, Vice President and Hon'ble Mr. A.K. Srivastava, Member (Technical) Date of Hearing: 25.9.2008 Date of Decision: 25.9.2008 ORDER NO................................. Per: Ms. Jyoti Balasundaram, Vice President
M/s. D.B. Electronics Pvt. Ltd. (hereinafter referred to as DBE), an SSI unit, are engaged in the manufacture of online uninterrupted power supply systems (UPS systems), static inverters, converters etc. During the course of visit of the officers of central excise to the factory of DBE, it was found that they were undervaluing UPS systems manufactured by them by not including the value of batteries supplied. Their contract with their customers was for the supply of UPS systems and battery. Show cause notice dated 4.2.1993 proposing recovery of duty of Rs.22,41,566.41 on the ground of undervaluation of UPS systems by non-inclusion of value of the battery during the period January 1988 to May 1992, was issued. The notice also proposed penal action under the provisions of Rule 173Q of the Central Excise Rules, 1944. The notice was adjudicated by the Collector of Central Excise and Customs vide order dated 1.7.1994 wherein the proceedings initiated in the notice were dropped. The order was reviewed by the CBEC, and appeal No. E/1395/95-A was filed before the Tribunal by the Revenue. The appeal was disposed of vide final order No. 184/2000-A dated 16.3.2000 holding that the value of batteries was to be added to the assessable value of UPS systems only in those cases where the UPS systems were cleared from DBE along with battery. The other issue in the show cause notice, namely, that DBE and M/s. Vistar Electronics Pvt. Ltd. were related persons and, therefore, the invoice value of the UPS systems was the correct assessable value for the goods manufactured by DBE and accordingly, differential central excise duty was required to be paid, was decided in favour of the respondents (DBE) by the Tribunal. Show cause notices covering the period ranging from January 1992 to 31.3.2000 were issued from time to time to DBE on the same issue as covered in the show cause notice of February 1993. After the remand order of the Tribunal, the Commissioner of Central Excise directed the Superintendent of Central Excise to visit the factory of DBE to understand the nature of transaction effected by them, i.e. whether the batteries were supplied along with the UPS systems. In his report dated 26.9.2008, the Superintendent clearly stated that nothing had been identified evidencing clearance of batteries along with UPS; however, certain invoices have been identified indicating direct despatch of batteries from the premises of suppliers of batteries to customers to whom DBE sold UPS systems. It was also verified that the reference to invoices made in the show cause notices was exclusive of batteries and delivery of UPS systems was made under separate duty paying invoice. The Commissioner held that there is no ground to include the cost of batteries in the assessable value of UPS systems manufactured and cleared by DBE during the period covered by show cause notice dated 4.2.1993 and the period covered under the remaining 24 show cause notices and hence dropped the proceedings initiated in the above 25 notices. It is against this order dated 27.9.2005 of the Commissioner that the Revenue has preferred appeal No. E/3422/06.
2. By order dated 18.11.1999, the Assistant Commissioner confirmed a demand of Rs.96,253/- against M/s. D.B. Technologies Pvt. Ltd. by including the value of bought out items, viz. battery, in the value of UPS systems. Vide order dated 22.4.2003, the Commissioner (Appeals) held that the value of battery was not includible in the assessable value of UPS systems and, therefore, set aside the adjudication order and allowed the appeal of the assessees. It is against this order that the Revenue has preferred the other appeal, namely, E/2058/03.
3. We have heard both sides.
4. We find that the Tribunal in is order reported in 2000 (126) ELT 1017 (final order No. 184/2000-A dated 16.3.2000 in appeal No. E/1395/95-A) has clearly held that the value of batteries is to be added to the assessable value only in cases where the UPS systems were cleared from DBE along with battery. The Commissioner has conducted verification through the Superintendent of Central Excise who has reported categorically as under:-
"The documents have been verified. Nothing has been identified evidencing clearance of batteries along with UPS. However, certain invoices have been identified indicating direct dispatch of batteries from the premises of the suppliers of batteries to the customers to whom M/s. DBE sold UPS.
No Modvat credit was raised by M/s. DBE with reference to batteries so dispatched directly without receiving the goods in the factory of M/s. DBE. Declaration for availing Modvat credit in relation to battery in question was made first time by the assessee only during 2000.
The reference of invoices made in the show cause notices have been found to be exclusive of battery only. The delivery of UPS system has been observed to be made under separate duty paying invoice. The delivery of the batteries was made by the assessee at the option of their customers. The said activities related to transaction of batteries have been stated to be the trading activity of the assessee.
Relevantly, annexure to the show cause notice has specifically made a mention of the fact of direct delivery of batteries from the suppliers to the premises of the customers of the UPS.
In the light of above observations, it appears that no liability for central excise duty is attracted in relation to batteries under the given set of facts."
5. In this view of the matter, when the Revenue does not challenge, and cannot challenge, the verification carried out by its own Superintendent, applying the ratio of the remand order of the Tribunal, we hold that the value of battery cannot be included in the assessable value of UPS system for the reason that it has been verified and found that no UPS systems together with batteries were cleared from DBE. We, therefore, uphold the order dated 27.9.2005 of the Commissioner and reject appeal No. E/3422/06. As regards the second appeal, since no such verification was carried out in the factory of M/s. D.B. Technologies Pvt. Ltd., we set aside the impugned order and remand the case to the adjudicating authority to carry out factual verification as to whether any batteries were cleared from D.B. Technologies Pvt. Ltd. along with UPS systems. If the verification report shows that batteries were cleared along with UPS systems by D.B. Technologies Pvt. Ltd., then it goes without saying that the value of battery will be included in the value of UPS system. Fresh orders shall be passed by the adjudicating authority after extending a reasonable opportunity to the assessees of being heard in their defence. Appeal No. E/2058/03 is thus allowed by way of remand.
(Pronounced in Court) (A.K. Srivastava) Member (Technical) (Ms. Jyoti Balasundaram) Vice President tvu 1 2