2018 (9) TMI 1948 - Commission - Central Excise

Settlement of case - Undervaluation - Double/Triple Axle Articulated Trailers, Tippers, General Cargo Bodies, Bulk Semi Trailers, etc. - undervaluation by not including the complete value of the finished excisable goods in the assessable value - suppression of actual value received in respect of the finished goods - correct and complete value in terms of Rule 6(3) of the Cenvat Credit Rules, 2004 not adopted - wilful suppression of facts. Demand of duty and Interest - HELD THAT - This is a case where the applicant who was engaged in the manufacture of excisable goods such as Double/Triple Axle Articulated Trailers, Tippers, General Cargo Bodies, Bulk Semi-Trailers etc. falling under Chapter 87 of the Central Excise Tariff Act, 1985 had resorted to undervaluation in respect of the above said excisable goods that were manufactured and cleared by them and non-adoption of correct and complete value in terms of Rule 6(3) of the Cenvat Credit Rules, 2004 - Investigations conducted by the Officers of Headquarters Preventive Unit, Bangalore-I Commissionerate, resulted in issue of show cause notice in the impugned case demanding Central Excise duty to the tune of ₹ 31,00,460/- along with applicable interest. Penal provisions were also proposed on the applicant and co-applicants. Considering the report of the Revenue in the instant case which reiterated the earlier stand of the Principal Commissioner to consider the applicant s request to adjust the payment made as Service Tax against the demand of 6% of differential Central Excise duty, on the same issue, the Bench is inclined to agree with the stand of the Revenue and accordingly settles the Service Tax liability as ₹ 13,07,524/-. However, as the applicant has already paid Service Tax at higher percentage (12.36%) and no further liability subsists in this regard. The applicant has also undertaken not to claim refund on this count. As the applicant has made true and full disclosure of the liability before the Bench and also co-operated in the proceedings before the Bench, the Bench thus holds it a fit case to settle the duty liability at ₹ 16,05,691/-. Imposition of penalty on applicant - HELD THAT - This is a case where the applicant failed to adopt correct assessable value and had resorted to undervaluation in respect of the excisable goods that were manufactured and cleared by them and did not adopt correct and complete value in terms of Rule 6(3) of the Cenvat Credit Rules, 2004 in respect of nil rated clearances made under Notification No. 12/2012-C.E., dated 17-3-2012. While filing the settlement application, the applicant has admitted to the allegations made in the SCN - But for the painstaking investigations by the Officers of Headquarters Preventive Unit, Bangalore-I Commissionerate, the duty evasion would have gone unnoticed. Hence penalty is imposable on the applicant. However, considering the co-operation extended in the proceedings and true and full disclosure made before the Bench, the Bench is inclined to take a lenient view and grants partial immunity from penalty to the applicant. Penalty on the co-applicants - HELD THAT - It is ascertained that both the partners of the applicant firm, Shri Gopala Reddy B. and Shri K. Ramesha were the key persons fully involved in the day to day activities of the firm and had masterminded the modus operandi to evade payment of Excise duty. Hence penalty is imposable on the co-applicants. However, considering the co-operation extended in the proceedings before the Bench true and full disclosure made before the Bench, and the applicant had paid Service Tax @ 12.36% instead of 6% CED (this 2nd component of the demand comes to ₹ 13,07,524/-), the Bench is inclined to take a lenient view and grants partial immunity from penalty to the co-applicants. Prosecution - HELD THAT - Considering the facts and circumstances of the case, the Bench is inclined to grant immunity from prosecution to the applicant and the co-applicant. All the immunities as above are granted under Section 32K of Central Excise Act, 1944. The immunities granted above are liable to be withdrawn if, at any time, it comes to the notice of the Bench that, in obtaining this order of settlement, any material particulars have been withheld or any false evidence has been given.

Summary

Issues Involved:
1. Undervaluation of excisable goods.
2. Incorrect adoption of assessable value.
3. Non-reversal of Cenvat credit.
4. Penalty and prosecution.

Issue-wise Detailed Analysis:

1. Undervaluation of Excisable Goods:
The applicant, engaged in manufacturing Double/Triple Axle Articulated Trailers, Tippers, General Cargo Bodies, and Bulk Semi-Trailers, was found to be undervaluing these goods to evade Central Excise duty. Investigations revealed that the applicant did not include the value of tyres supplied by customers in the assessable value of trailers, leading to a duty evasion of ?17,92,936/-. The applicant admitted to the undervaluation but claimed eligibility for cum-duty benefits, recalculating the duty liability to ?16,05,691/-. The Commission accepted this recalculated amount and confirmed the payment of ?16,05,691/- towards excise duty and ?13,15,449/- towards interest.

2. Incorrect Adoption of Assessable Value:
The applicant was also found to have incorrectly adopted the assessable value for labour charges, paying Service Tax at 12.36% instead of Central Excise duty at 6%. The Commission, noting that the applicant had paid Service Tax at a higher rate, agreed to adjust this payment against the differential Central Excise duty demand of ?13,07,524/-. The applicant undertook not to claim any refund on this account.

3. Non-reversal of Cenvat Credit:
The applicant failed to reverse the Cenvat credit in terms of Rule 6(3) of the Cenvat Credit Rules, 2004, for nil-rated clearances under Notification No. 12/2012-C.E. The Commission noted that the applicant had paid Service Tax on the value claimed as labour charges, which was verified and accepted by the Revenue. The Commission settled the Service Tax liability at ?13,07,524/- and confirmed that no further liability subsisted as the applicant had already paid a higher percentage.

4. Penalty and Prosecution:
The Commission imposed a penalty of ?50,000/- on the applicant and ?10,000/- each on the co-applicants, Shri Gopala Reddy B. and Shri K. Ramesha, for their involvement in duty evasion. The penalties were to be paid within 30 days. The Commission granted partial immunity from further penalties and immunity from prosecution, provided the penalties were paid as ordered. The Commission emphasized that these immunities could be withdrawn if any material particulars were found to be withheld or false evidence was provided.

Conclusion:
The Commission settled the case by confirming the duty liability at ?16,05,691/- and interest at ?13,15,449/-, with penalties imposed on the applicants. Immunities from further penalties and prosecution were granted, contingent upon the payment of imposed penalties within the stipulated time. The order highlighted the importance of full cooperation and truthful disclosure by the applicants in the settlement process.