Custom, Excise & Service Tax Tribunal
Peekay Fastening Pvt.Ltd vs Coms,C.Ex - Haldia Commr.Kol on 5 October, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Appeal No. Ex/337/2008
Arising out of Order-in-Appeal No. 25/HAL/2008 dated 31.03.2008
passed by the Commissioner (Appeal-I) Central Excise, Kolkata.
M/s. Peekay Fastening Pvt. Ltd.
Applicant (s)/Appellant (s)
Vs.
Commissioner of Central Excise, Kolkata.
Respondent (s)
Appearance:
Shri N. K. Choudhary, Advocate for the Appellant (s) Shri S. Mukhopadhyay, Suptd. (AR) for the Respondent(s) CORAM:
HON'BLE SHRI V. PADMANABHAN, MEMBER (TECHNICAL) HON'BLE SHRI S. K. PATI, MEMBER (JUDICIAL) Date of Hearing/Decision: - 05.10.2018 ORDER No. FO/A/76750/2018 Per CORAM.
The present appeal is filed by the Revenue against Order-in- Appeal No. 25/HAL/2008 dated 31.03.2008.
2. The appellant entered into a contract with the railways for supply of Railway Tracks, Nuts, Bolts, etc. The dispute is covering the financial years, 2001-2002 and 2003-2004. During these financial years, the appellant supplied goods to the Railways by availing the SSI exemption benefit under the relevant notifications. In terms of the price escalation clause in the Railway contracts the appellant received certain additional amounts in the 2004-05, for the goods cleared in earlier years. The additional duty which became payable was also paid by the 2 Appeal No. E/337/2008 appellant by including such additional amount as part of the turnover for the financial year 2004-05. But the department was of the view that the escalation amounts received in the year 2004-05, are relatable to the goods cleared in the earlier years and such amounts and hence are required to be added to the turnover of the appellant in the respective year when the goods were cleared. The eligibility of SSI exemption was consequently re-worked out in the year, 2001-02, 2002-03 & 2004-05 and the differential duty was demanded. The impugned order upheld the demand for duty. The impugned order has been challenged in the present appeal.
3. Heard Shri N. K Chaoudhary Ld. Advocate for the appellant and Shri S. Mukhopadhyay, Ld. D. R. for the Revenue.
4. The submissions of the Ld. Advocate, for the appellant are summarized below:
(i) He reiterated the assessees view that the escalation amount received by them in the year 2004-05 is required to be accounted for in the turnover of the assessee in the year in which it was received. He emphasizes the fact that the goods at the time of clearance were duly accounted for in terms of value and hence such assessment cannot be re-opened only for the reason that the escalation amount was received subsequently. The Ld. Advocate relied on the decision of the Hon'ble Supreme Court in case of Commissioner of Central Excise, Delhi-III Vs. Hitkari Fibres Ltd. reported in 2015 (324) E.L.T. 24 (S.C.). He submitted that the Hon'ble Supreme Court has held that the additional amount received at subsequent stage could not be added to the transaction value at the time of clearance of the goods. 3 Appeal No. E/337/2008
5. The Ld. D.R., for the Revenue justified the impugned order. His submissions are summarized below :
(i) The escalation amount received is relatable to the goods cleared in the respective year, 2001-02 or 2003-04.
(ii) He refers to Supreme Court decisions in the case of Commissioner of Central Excise, Pune Vs. SKF India Ltd. reported in 2009 (239) E.L.T. 385 (S.C.) and International Auto Ltd. Vs. Commissioner of Central Excise, reported in 2010 (250) E.L.T. 3 (S.C.). In these two decisions, the Apex Court as held that in cases where escalation amounts have been received subsequent, to the clearance the goods not only differential duty was payable, but also interest is payable from the date of original clearance of the goods.
6. The Ld. D.R. for the Revenue, also relied on decision of the Hon'ble Supreme Court in the case Steel Authority of India Ltd. Vs. Commissioner of Central Excise, Raipur, reported in 2015 (326) E.L.T. 450 (S.C.) wherein the matter has been referred to the Larger Bench and is pending. In the referred to the decision of the Hon'ble Rajasthan High Court in the case of Commissioner of Central Excise, Jaipur Vs. Man Structurals Pvt. Ltd. reported in 2016 (338) E.L.T. 36 (Raj.) and submitted that the Hon'ble High Court has taken the view that when matter is pending before the Larger Bench of the Hon'ble Supreme Court, the earlier decisions of the Apex Court in the case of SKF India Ltd. and International Auto Ltd. are required to be followed. He finally submitted that in the light of the decision of the Apex Court in respect of interest on escalation amount received subsequently, the impugned order may be upheld.
4 Appeal No. E/337/2008
7. The dispute has arisen on account of certain amounts received by the appellants from the railways in the year, 2004-05, which pertains to the goods cleared to the railways during in the period 2001-02 to 2003-04. The Revenue was of the view that the escalation amounts are required to be added to the turnover of the respective years and the benefit of SSI exemption re-worked out. If, such exercise is carried out, differential duty as upheld by the lower authorities becomes payable. But such view is strongly contested by the appellant with the support of the decision of the Apex Court in the case of Hitkari Fibres Ltd. (Supra). We have perused the said decision of the Hon'ble Supreme Court in the Apex Court considered the case of additional amounts received by the respondent therein pertaining to the goods cleared earlier. Hon'ble Apex Court observed as follows:
"9. In the present case, it is not in doubt that the time when the goods were cleared, the price which was charged from M/s. Maruti and the duty was paid on the said price. No doubt, some additional amount is received thereafter, on account of price escalation. However, it is not coming on record as to under what circumstances such price escalation was given. No such case was set up by the Revenue that the price was understated or depressed at the time of clearance of the goods and the additional amount was received subsequently, by a suspicious kind of arrangement. Even when the inquiries were made, we are conscious of the fact that the respondent-assessee had not appeared when summons were issued to clarify the 5 Appeal No. E/337/2008 position. However, in any case, the inquiries were made from M/s. Maruti and therefore, the concerned officer could find out from M/s. Maruti as to under what circumstances, price escalation was given at the time of clearance of the goods.
10. In the absence of any such facts, it is difficult to hold that the aforesaid additional amount received at a subsequent stage was to be added for the purpose of arriving at the transaction value."
8. We are of the opinion that the decision of the Apex Court will be applicable to the present facts and circumstances since in the present case for no malafides are alleged against the appellant. By following the said decision, the impugned order is set aside and the appeal is allowed.
(Dictated and pronounced in the open court.)
(S. K. Pati) (V. Padmanabhan)
Member (Technical) Member (Technical)
Tushar Kr.