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2018 (7) TMI 528 - AT - Central ExciseValuation - transmission and power shift transmission elements and parts thereof - inclusion of value of free of cost components/raw materials supplied by M/s Ford India Private Ltd. (M/s FIPL) - demand of duty with interest and penalty u/s 11AC - Extended period of limitation - intent to evade present or not? - Held that - There is no denial of the fact that M/s FIPL has revised the value of free of cost raw material supplied by them to the appellant retrospectively and since the value of F.O.C. raw materials was the basis for determination of assessable value of the manufactured products for payment of central excise duty. It was the responsibility of the appellant to revise the price of his manufactured products as soon as they came to know of revision of value of the F.O.C. raw materials - It is seen that Hon ble Supreme Court in its various pronouncements has held that only non-payment of Central Excise Duty because of certain innocuous omissions cannot be compared with collusion or willful misstatement or suppression of facts etc. as provided under Section 11A of Central Excise Act 1944. Whether the appellant has willfully done certain proactive acts which can lead to the invocation of elements such as fraud collusion willful misstatement or suppression of facts under Section 11AC? - Held that - The appellant was not in a situation of control in this case and revision of prices of his manufactured product squarely depended on M/s F.I.P.L. providing the correct value of their F.O.C. components. As soon as the appellant came to know that the value of F.O.C. products has been revised on higher side for past years by M/s F.I.P.L. the appellant has immediately deposited the excise duty short paid alongwith interest. The short payment of Central Excise duty on account of re-revised prices of F.O.C. products was neither deliberate nor with any malafide intentions and it was because of the facts that the circumstances of the matter were beyond the control of the appellant and therefore in our opinion though Central Excise duty is certainly leviable on the revised value of the appellants products supplied to M/s F.I.P.L. but the case is certainly not made out for levy of penalty under Section 11AC of Central Excise Act 1944. The Central Excise duty short paid on the clearances effected with the assessable value which was determined on the basis of re-revised value of F.O.C. components/raw material is recoverable under Section 11A of Central Excise Act 1944 alongwith interest as leviable under Section 11AA/11AB of Central Excise Act 1944 - penalty set aside - appeal allowed in part.
Issues Involved:
1. Imposition of Penalty under Section 11AC of Central Excise Act, 1944. 2. Levy of Interest under Section 11AA/11AB of Central Excise Act, 1944. 3. Invocation of Extended Period of Limitation for Demand of Central Excise Duty. Detailed Analysis: 1. Imposition of Penalty under Section 11AC of Central Excise Act, 1944: The appellant contested the imposition of penalty under Section 11AC, arguing that there was no intention to evade duty by suppressing the value of their product. The assessable value was regularly revised based on the cost of free-of-cost components provided by M/s FIPL. The Tribunal noted that the appellant was not aware of the retrospective revision of the value of free-of-cost raw materials until the audit in November 2013. Upon discovering the revision, the appellant promptly paid the differential duty and interest. The Tribunal concluded that the short payment was neither deliberate nor with malafide intentions, and thus, the penalty under Section 11AC was not justified. The Tribunal relied on the Supreme Court's decision in M/s Uniworth Textiles vs. CCE, Raipur, which held that mere non-payment of duties is not equivalent to collusion or willful misstatement or suppression of facts. 2. Levy of Interest under Section 11AA/11AB of Central Excise Act, 1944: The appellant argued that no interest was payable as there was no instance of short payment of duty. However, the Tribunal held that the short payment of Central Excise duty was established, and under Section 11AA, interest is inevitable. The Tribunal referred to the Supreme Court judgments in CCE, Pune vs. SKF India Ltd. and CCE vs. International Auto Ltd., which clarified that interest is chargeable on delayed or deferred payment of duty for whatever reasons. The Tribunal emphasized that interest is levied to compensate for the loss of revenue, and thus, the levy of interest in this case was upheld. 3. Invocation of Extended Period of Limitation for Demand of Central Excise Duty: The appellant contended that the show cause notice was time-barred as it was issued beyond the normal period of one year. The Tribunal examined whether there was any element of fraud, collusion, willful misstatement, or suppression of facts to justify the invocation of the extended period. The Tribunal found that the appellant was not in control of the revision of prices, which depended on M/s FIPL providing the correct value of free-of-cost components. The Tribunal concluded that the short payment was not due to any deliberate act by the appellant but was beyond their control. Therefore, the invocation of the extended period was not justified. Conclusion: The Tribunal modified the impugned order by waiving the penalty under Section 11AC of the Central Excise Act, 1944, while upholding the rest of the order, including the levy of interest under Section 11AA/11AB of the Central Excise Act, 1944. The Tribunal emphasized that the short payment of duty was not deliberate and was due to circumstances beyond the appellant's control. The Tribunal's decision was pronounced in open court on 05/07/2018.
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