2015 (2) TMI 1131 - AT - Central Excise

Tariff value - MRP adoption - Held that - The assessee was selling the goods at a price of ₹ 200/- to ₹ 330/- to their customers and based upon the average quantity in different range; the Commissioner (Appeals) took ₹ 262/- as the average MRP and thereafter computed the tariff value as 60% of ₹ 262/-. In our view, this method of computation is incorrect. When the investigation has indicated that the said goods were being sold with a MRP in the range of ₹ 325/- to ₹ 375/-, which was also confirmed by their buyers, the Commissioner (Appeals) should have taken the average of the same, i.e. ₹ 350/- and arrived at the tariff value as 60% of ₹ 350/- and thereafter the total assessable value and duty liability. We, therefore, set aside this part of the impugned order and remand the matter to the original authority to recompute the value of the goods cleared based upon the MRP of ₹ 350/- per piece. Return of goods - whether the assessee has not been able to bring on record the corresponding invoices under which the goods were originally cleared and also what happened to the goods after return? - Held that - Keeping in view the fact that the assessee is a small scale manufacturer and the duty on garments were introduced for the first time in 2001 and was withdrawn in 2002 and the dispute is pertaining to that period and the assessee was not aware of the central excise procedure and also the fact that Revenue has not made any attempt to correlate or tabulate the goods cleared, it is not under dispute that the said goods have come from their buyers whose statements have also been recorded by the Revenue, it will not be appropriate to reject the assessee s claim. We also note that the assessable value will be required to be recomputed in view of our direction relating to MRP in respect of such goods also and the assessee will be required to extend the benefit with recomputed value. Duplication of invoices - Held that - As find that during investigation, the assessee has admitted that they were making kachcha invoices in respect of unaccounted sale of garments or purchase of fabrics and pacca bills in respect of accounted sale of garments or purchase of fabrics and therefore, this argument of the learned counsel does not hold water. However, we find that the Commissioner (Appeals) in his order has extended the benefit in respect of specific kachcha and pacca bills which were both of the same date and having the same quantity and value. There is no evidence brought by the Revenue that the assessee has cleared twice the same goods on the same date or cleared twice the quantity. Under the circumstances, we hold that the assessee would be entitled of reduction in the quantity/value in respect of the invoices mentioned in the impugned order, i.e. quantity of garments cleared will require to be reduced from 88613 to 84050 pieces. Invocation of extended period and penalty under Section 11AC - Held that - As we find that during the whole year i.e. 2001-2002, the assessee did not bother to take any registration or pay any excise duty. Thus there was a blatant defiance of law. There was suppression of facts and contravention of various provisions of Central Excise Law with a wilful intention to evade duty. We, therefore, hold that the extended period of limitation under Section 11A as also penalty under Section 11AC are imposable. Argument for non-imposition of penalty on the grounds of being illiterate etc. is also not acceptable.

Summary

Issues:
1. Tariff value computation
2. Return of goods
3. Duplication of invoices
4. Invocation of extended period and penalty under Section 11AC

Analysis:
1. Tariff value computation:
The investigation revealed that the assessee affixed MRPs ranging from Rs. 325 to Rs. 375 on garments. The original authority and Commissioner (Appeals) used different methods to compute the tariff value. The Tribunal found the Commissioner's method incorrect as it did not consider the actual selling prices. The Tribunal directed the original authority to recompute the value based on an average MRP of Rs. 350 per piece.

2. Return of goods:
The Commissioner (Appeals) accepted the assessee's claim of returned goods based on lorry receipts and delivery challans. The Revenue contested the lack of corresponding invoices and post-return details. Considering the circumstances of the assessee's unfamiliarity with excise procedures and lack of effort by the Revenue to correlate goods, the Tribunal upheld the assessee's claim. The assessable value needs to be recalculated along with the benefit extended.

3. Duplication of invoices:
The assessee admitted issuing duplicate invoices for unaccounted and accounted sales. While the Tribunal rejected the argument of kachcha and pacca bills being duplicates, it acknowledged the Commissioner's benefit extension for specific invoices. Without evidence of double clearance, the Tribunal ordered a reduction in the quantity of garments cleared.

4. Invocation of extended period and penalty under Section 11AC:
The Tribunal found the assessee's failure to register or pay excise duty during 2001-2002 as a blatant violation of law with a wilful intent to evade duty. Consequently, the extended period of limitation and penalty under Section 11AC were deemed applicable.

The appellant's plea against penalty imposition was dismissed, and the Tribunal remanded the matter to the original authority for recalculating duty liability, interest, and penalties. The appeals were disposed of accordingly.