2014 (11) TMI 921 - AT - Central Excise

Waiver of pre deposit - Difference between running bills and consolidated bills - Government is coming to the conclusion that the difference amount between ₹ 112 crore and 124 crore is actually excise duty collected. - Held that - We are unable to find basis for this conclusion at all. When we compared it was submitted based on the statement given by the Additional Vice President of PSL that the treatment for the purpose of working out the amount by L&T is the system of piece rate bill whereas the appellant s billing system is based on quantity. Nevertheless when we see, both the statements referred to by us and reproduced as in the show cause notice, according to L&T, the gross amount is ₹ 158.95 crore and deductions/recoveries is ₹ 124.41 crore. When we look at the categories of deductions/recoveries, we see that these are the amounts which are actually paid by L&T in some other form to the appellant and not in the form of cash. Similarly in the case of bills raised by the appellant also the amount of ₹ 154 crore is the payment received from L&T in the form of HR coil and other items. In the statement of the appellant, excise duty is not reflected because the excise duty is not paid by the appellant. In the case of L&T these are figuring because probably this was taken into account at the time of agreement for calculating the bill amount payable but in fact it was not paid or was paid. However when we summed up the figures, according to L&T record the net amount payable is ₹ 34.53 crore whereas according to the appellants net amount receivable is ₹ 35.03 crore. The above analysis would show that according to the bills preferred by both the sides, the amount payable to which both sides agree is only about ₹ 34.53 crore which is actually less than what they have already received. Whereas it is the department s claim that they have received more than ₹ 11.26 crore as excise duty and this figure is nowhere getting reflected in both. The above analysis would show that prima facie we are not in a position to appreciate the fact that the appellants have received the amount as excise duty and is recoverable as per the provisions of Central Excise law. Therefore appellants have made a prima facie case in their favour for complete waiver for this amount also. - Stay granted.

Summary

Issues Involved:
1. Whether the appellant can be considered to have manufactured pipes on a job work basis.
2. Inclusion of transportation, loading, and laying charges in the assessable value.
3. Demand of duty under Section 11D(2) for excise duty collected but not deposited.
4. Applicability of the principle of res judicata.
5. Demand beyond the normal period of limitation.
6. Imposition of penalties under Section 11AC and Section 11D(1) of the Central Excise Act, 1944.

Issue-wise Detailed Analysis:

1. Manufacturing Pipes on Job Work Basis:
The Tribunal had previously ruled in favor of the appellant, stating that the price charged to L&T should be accepted, indicating that the price is in accordance with transaction value provisions. This decision is pending before the Supreme Court. Thus, the valuation issue remains unresolved until the Supreme Court's decision. The Tribunal granted a waiver of pre-deposit and stay against recovery for the demands of Rs. 3,18,68,213/- and Rs. 2,07,01,159/-.

2. Inclusion of Transportation, Loading, and Laying Charges:
The Order-in-Original No. 10/2011, dated 28-2-2011, included transportation charges in the assessable value, stating that the place of removal is the site and not the factory gate. Additionally, the consideration received for laying and jointing was deemed includable in the assessable value as it is 'in connection with' or 'by reason of' the pipes being sold.

3. Demand of Duty under Section 11D(2):
The demand of Rs. 11,26,22,845/- was raised on the grounds that the appellant collected excise duty from L&T but did not deposit it with the Government from 20-2-2004 to August 2004. The Tribunal found discrepancies in the gross and net amounts billed and received, concluding that the department's claim of excise duty collection was unsubstantiated. Therefore, the appellant made a prima facie case for a complete waiver of this amount, and the Tribunal granted a stay against recovery.

4. Applicability of the Principle of Res Judicata:
The Order-in-Original No. 10/2011 stated that the principle of res judicata was not applicable as the appellants had not appealed against the Order-in-Original No. 34/2005, dated 20-3-2006.

5. Demand Beyond Normal Period of Limitation:
The Tribunal noted that the entire demand was barred by limitation, implying that the demands raised were beyond the permissible period for such actions.

6. Imposition of Penalties:
Penalties of Rs. 5,25,69,372/- under Section 11AC and Rs. 5,000/- under Section 11D(1) of the Central Excise Act, 1944, were imposed. The Tribunal's analysis and subsequent stay orders indicate a critical examination of these penalties, reflecting the appellant's prima facie case against such impositions.

Conclusion:
The Tribunal provided a comprehensive analysis of the issues, granting waivers and stays on significant demands while awaiting the Supreme Court's decision on the valuation issue. The detailed examination of billing discrepancies and the principle of res judicata further emphasized the complexity and ongoing nature of the case. The operative portion of the order was pronounced in open court on 3-4-2014.