Custom, Excise & Service Tax Tribunal
Sahajanand Laser Technology Ltd vs Ahmedabad-Iii on 12 July, 2018
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Appeal No. E/1422/2010-DB
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
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Appeal No. E/1422/2010-DB
(Arising out of OIA No. 108/2010(Ahd-III)KCG/Commr(A)/Ahd dated 17.06.2010
passed by the Commissioner (Appeals) of Central Excise & Customs,
Ahmedabad)
M/s Sahajanand Laser Technology Limited : Appellant (s)
Vs
Commissioner of Central Excise, Ahmedabad : Respondent (s)
Represented by:
For Appellant (s) : Shri Devashish K. Trivedi, Advocate For Respondent (s): Shri Amit Kumar Mishra, Deputy Commissioner (AR) CORAM :
Mr. Ramesh Nair, Hon'ble Member (Judicial) Mr. Raju, Hon'ble Member (Technical) Date of Hearing: 20.06.2018 Date of Decision: 12.07.2018 ORDER No. A/11417 / 2018 Per : Mr. Ramesh Nair The brief facts of the case are that the appellant are engaged in the manufacture of excisable goods, namely, (i) Laser system for material processing (ii) Spares for laser system for material processing (iii) Microwave and R. F. absorbers and (iv) EMI/EMC shielded Enclosures, falling under Central Excise Tariff heading No. 85158090, 85159000, 85437099 and 85437099 respectively. On scrutiny of records, it was noticed that the appellant had manufactured and cleared machineries such as Laser Cutting machine, Diamond Cutting machine etc. The machineries manufactured by the appellant are specialised tailor made machineries to 2 Appeal No. E/1422/2010-DB perform specific function. The appellant have also supplied software for operating the machines. On further verification, it was found that the appellant during the period 2004-05, 2005-06 and 2006-07 had cleared the said software machines without payment of duty by claiming the exemption notification No. 6/2006-CE dated 01.03.2006. The case of the department is that the appellant ought to have included the value of the software in the value of machine, but, instead of doing so, they had cleared the software related to those machines separately under a cover invoice without payment of duty. A show cause notice dated 13.04.2009 was issued whereby the value of software amount of Rs. 2,49,38,772/- was proposed to be added in the assessable value of laser cutting machines, Diamond cutting machines for the purpose of assessment in terms of Section 4 of Central Excise Act, 1944 and secondly a demand of central excise duty on the said value amounting to Rs. 40,68,408/- was proposed, interest under Section 11AB and penalty under Section 11AC was also proposed. The show cause notice was adjudicated by the Joint Commissioner of Central Excise, Ahmedabad-III on dated 22.03.2010 wherein the demand, interest and penalty were confirmed. Being aggrieved by the order-in-original, the appellant filed appeal before the Ld. Commissioner (Appeals), who disposed of the appeal giving various findings. In the impugned order, the Ld. Commissioner (Appeals) held that the software cleared by the appellant is eligible for classification under 3 Appeal No. E/1422/2010-DB Chapter Heading No. 8524 up to 31.12.2006. The appellant is not eligible for exemption from duty available to software vides Notification No. 6/2006-CE dated 01.03.2006. The appellant is liable to discharge central excise duty applicable on software during the period i.e. up to 31.12.2006 along with the applicable interest. However, the demand of duty for the period from April 2004 to March 2006 was held time barred. The demand of duty on the value of clearances after 01.01.2007 is sustainable along with applicable interest under Section 11AB of the Central Excise Act, 1944. Being aggrieved by the said impugned order, the appellant filed the present appeal.
2. Shri Devashish K. Trivedi Ld. Counsel appearing on behalf of the appellant submits the software was not installed in the machines manufactured and supplied by the appellant, the software was separately declared and the same was sold separately as such under the CD. The software supplied separately is not a part and parcel of manufacture of machine. Therefore, the value of the software cannot be included in the assessable value of the machines. He further submits that the software is independently classified under Chapter Heading No. 8524 which has been issued by the Commissioner (Appeals) if that be so in terms of note 6 of Chapter 85 even though the software is presented with the machine, the software is separately classifiable under Heading No. 8524. In such case, the value of software cannot be included. Once, the software is classified 4 Appeal No. E/1422/2010-DB under Chapter 8424 the relevant Notification No. 6/2006-CE dated 01.03.2006 (Sr. No. 27) clearly exempts the software. The lower authorities have wrongly interpreted that the software supplied by the appellant is a packaged software or canned software. He submits that this software is not for use by anyone, but, it is exclusively capable of being used in one particular machine. Therefore, it does not fall under the category of packaged and canned software, but, it falls under customized software which is meant for a particular customer, therefore, it is covered under the exemption. As regard the value of clearances after 01.01.2007, he submits that the entire demand is time barred as for the period 2004- 05, 2006-07, the show cause notice issued on 13.04.2009. He submits that the Ld. Commissioner (Appeals) has accepted that the issue was raised in the Audit Report by the Deputy Commissioner of Central Excise, Audit. However, though he has held that the demand for the period 01.04.2004 to 31.03.2006 as time barred, but, demand from April 2006 onwards was maintained. He submits that once the fact of the transaction has come to the notice of the Audit and the said period was held time barred, for the subsequent period it cannot be said that there is any suppression of fact. Accordingly, the demand for the subsequent period also to be time barred. He placed reliance on the following decisions:-
(i) Commissioner of Central Excise, Pondicherry vs. Acer India Ltd. - 2004 (172) ELT 289 (S.C.).
(II) Hewlett Packard India Sales (P) Ltd. Vs. Commissioner of Customs, Chennai -
2006 (203) ELT 477 (Tri.-Chennai).
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(iii) Commissioner of Customs, Mumbai vs. Hewlett Packard India Ltd. - 2006 (199) ELT 317 (Tri.-Mumbai).
(iv) ITI Ltd. Vs. Commissioner of Central Excise & Customs, Calicut - 2009 (233) ELT 277 (Tri.-Bang.).
(v) Nav Bharat Link Chain Mfg. (P) Ltd. Govindpur, Dhanbad, Bihar vs. Collector of Central Excise, Patna - 1985 (19) ELT 493 (Tribunal)
(vi) Commissioner of Central Excise, Delhi-I vs. Hi-Tech Electronics Industries -
2014 (314) ELT 689 (Tri.-Delhi).
(vii) Commissioner of Central Excise, Delhi-III vs. Carrier Aircon Ltd. - 2005 (184) ELT 113 (S.C.)
(viii) Al-Falah (Exports) vs. Commissioner of Central Excise, Surat-I - 2006 (198) ELT 343 (Tri.-LB).
(ix) V.V.F Ltd. Vs. Commissioner of Central Excise, Daman - 2010 (251) ELT 426 (Tri.- Ahmd.)
(x) Commissioner of Central Excise, Kolkata - IV vs. Birla NGK Insulators (P) Ltd. -
2009(247) ELT 631 (Tri.-Kolkata).
3. On the other hand Shri Amit Kumar Mishra Ld. Deputy Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. In support, he placed reliance on the following judgements:-
(i) Bhagyanagar Metals Ltd. Vs. Commissioner of Central Excise, Hyderabad-II -
2016 (333) ELT 395 (Tri.-LB)
(ii) Tata Unisys Ltd. Vs. Collector of Central Excise, Bombay - 1994 (73) ELT 96 (Tribunal).
4. We have carefully considered the submission made by both sides and perused the records. After going through the entire case, we find that this appeal can be disposed off only on the ground of limitation. Initially, the demand was raised for the period 2004-05 to 2006-07. However, the Ld. Commissioner (Appeals) held that the demand in the majority of period as 6 Appeal No. E/1422/2010-DB time barred. In this regard, the Ld. Commissioner (Appeals) has given the following findings:-
"12. As regard the ground of limitation argued by the appellant, I find that the present issue was raised vide Audit Report No. 80/2008-09 Dated 20.10.2008. In the said Audit Report, issued from F. No.VI/1(b)-65/1A/2008-09/AP-AIII by the Deputy Commissioner, C.Ex.(Audit), Ahmedabad-III, the date of which audit is undertaken is mentioned as 22-23-24/09/2008. The Period for which current audit is undertaken is mentioned as April, 2006 to August, 2008. Further, date of last audit is mentioned as 28.08.2006 to 30.08.2006. The appellant has submitted copy of last audit report with the appeal memorandum. In the said Audit Report period of audit is mentioned as 01.04.2004 to 31.03.2006 wherein issue in the present matter was not6 raised. From, the above factual position in the audit reports, I find that in the earlier audit conducted for the period from 01.04.2004 to 31.03.2006, the issue in the present matter was not raised. It was raised during the audit for the period from April 2006 to August 2008 only. Therefore, the contention of the appellant that extended period cannot be invoked has a force.
Further, the appellant has relied upon the decision of the Hon'ble Tribunal in case of CCE, Aurangabad Vs. Rohit Ind. Ltd. - 2009 (242) ELT 240 (Tri.-Mumbai) wherein it was held that Demand - Limitation - Invocation of extended period - Assessee having received free moulds and dies, but not included in the assessable value of parts manufactured - Suppression of facts - Evidence - Assessee unit was audited regularly during relevant period by Department and there was no dispute from auditors regarding short levy - Revenue having failed to produce any evidence to prove suppression of facts by assessee with intent to duty evasion, demand is time-barred and extended period not invocable - Section 11A of Central Excise Act, 1944. [para 9] In light of the above circumstance and decision mentioned above, I hold that the demand for the period from April-2004 to March-2006 is time barred. However, in the audit conducted for the succeeding period i.e. from April - 2006 to August - 2008 the present issue is raised, therefore, it cannot be said as time barred. Also as discussed at para 10 above the appellant is not eligible for the classification of the software separately under Chapter heading no. 8524 from 01.01.2007. The period after 01.01.2007 is also covered by the present audit report. The appellant should have changed the classification from 01.01.2007 and started to pay 7 Appeal No. E/1422/2010-DB the duty on the machines including the value of software. However, they have not done so and not informed the department is this regard. It was during the audit by the officer only, it has come to light. Therefore, demand of duty for the period from 01.04.2006 to 31.03.2007 is sustainable."
From the above findings, it can be seen that the Ld. Commissioner has admitted that the issue was raised in the Audit Report dated 20.10.2008 in respect of the Audit conducted for the period April 2006 to August 2008. On the basis of this Audit Report, the Ld. Commissioner (Appeals) held the demand for period 01.04.2004 to 31.03.2006 as time barred. We failed to understand why the demand for remaining period should not be held time barred on the same analogy. The ld. Commissioner (Appeals) observed that the last Audits conducted on 28.08.2006 to 30.08.2006, and if the Audit officers have not raised this issue for the subsequent period, no suppression of fact cannot be alleged against the appellant. Therefore, we do not agree with the discriminative finding given by the Commissioner (Appeals) in as much as the demand for 01.04.2004 to 31.03.2006 was held time barred and for the subsequent period, the demand was held within time. Therefore, we are of the view that the demand for the entire period is time barred, as the same was issued invoking the extended period i.e. beyond one year from the date of show cause notice. Since, Audit has been conducted right from 28.08.2006 to 30.08.2006 and show cause notice was issued on 13.04.2009 the entire demand stand time barred. It is also observed that the appellant have been classifying the software under 8 Appeal No. E/1422/2010-DB Chapter Heading No. 8524 in claiming the exemption notification which were declared in their sale invoice. Considering this fact also it can not be said that there is a suppression of fact on their part. Accordingly, in our considered view, the entire demand is time barred. Hence, we modify the impugned order and the appeal is allowed on the ground of time barred without addressing other issues.
(Order pronounced on12.07.2018)
(Raju) (Ramesh Nair)
Member (Technical) Member (Judicial)
G.Y.