2015 (10) TMI 2266 - AT - Central Excise

Penalty u/s 11AC - valuation - inclusion of cost of moulds - Interest u/s 11AB - Held that - Period involved in the present case is from 1996 to 2000 and under the old Central Excise Valuation Rules there was no specific mention of adding the proportionate cost of moulds. It is true that this Tribunal vide the order in the case of Flex Industries Ltd. (1997 (1) TMI 173 - CEGAT, NEW DELHI) has held that the said cost would be includible. However, that by itself does not imply that any manufacturer who was not including the said proportionate cost was doing so with the wilful intention to evade payment of duty and each case has to be considered in the facts and circumstances of that case. In the present case, we note that some time in 2001 the respondent realized their mistake and they did take remedial measures and they themselves approached Godrej Appliances Ltd. and got details such as certificate from the Chartered Accountant etc. and thereafter computed the differential duty. The respondent B. Tej Enterprises paid the duty suo motu without any enquiries or any objection from the department. This conduct of the respondent clearly indicates that there was no intention leave alone wilful intention to evade payment of duty. Under the circumstances, in our considered view, this is not a case of imposition of penalty under Section 11AC or imposition of interest under the old Section 11AB (which again requires fraud, collusion, wilful misstatement, suppression of facts etc. with intention to evade duty). We do not find any case for imposition of penalty under Rule 209A also either on second respondent or third respondent. - The issue involved in the present case is relating to penalty under Section 11AC which depends on the facts and circumstances of the case and we do not consider it necessary to discuss each of the case laws quoted by both the sides. Similar is the position about interest under old Section 11AB - Decided against Revenue.

Summary

Issues:
1. Inclusion of amortization cost of moulds in assessable value of plastic moulded components.
2. Imposition of penalty under Section 11AC, interest under old Section 11AB, and penalty under Rule 209A.

Issue 1: Inclusion of amortization cost of moulds in assessable value:
The case involved appeals by Revenue against an order passed by the Commissioner (Appeals) regarding the inclusion of the amortization cost of moulds in the assessable value of plastic moulded components. The respondent, a manufacturer, had paid excise duty on parts manufactured for another party, who provided moulds for production. The issue arose from conflicting decisions and subsequent clarification by the Tribunal on whether the amortization cost of moulds should be included in the assessable value. The respondent, upon realizing the mistake of not including the cost for a certain period, paid the differential duty suo motu. The Revenue initiated an investigation, issued a show cause notice demanding interest and penalties, which was challenged by the respondents before the Commissioner (Appeals).

Issue 2: Imposition of penalty under Section 11AC, interest under old Section 11AB, and penalty under Rule 209A:
The Additional Commissioner argued that the legal position regarding the inclusion of the amortization cost was clear based on previous Tribunal judgments. The respondent contended that they were not aware of the requirement to include the cost before a certain period and rectified the error upon realization. The respondent maintained that their actions were bona fide and not intended to evade duty. The Tribunal considered the facts and circumstances of the case, noting that the respondent rectified the mistake voluntarily, without objections from the department. The Tribunal concluded that there was no intention to evade duty, and therefore, no penalty under Section 11AC, interest under old Section 11AB, or penalty under Rule 209A was applicable. The Tribunal dismissed all appeals filed by the Revenue.

This detailed analysis highlights the key legal issues, arguments presented by both parties, relevant case laws, and the Tribunal's decision regarding the inclusion of amortization cost in the assessable value and the imposition of penalties and interest in the case.