2016 (9) TMI 1100 - HC - Central Excise

Valuation - includability - ammortised tool cost - demand alongwith penalty - Held that - the tooling agreement with M/s.Ford India was completed only on 13.7.2000 and that they paid the duty involved immediately thereafter on 14.7.2000 and 20.7.2000, indicated the reason why they could not pay the duty earlier. Furthermore, the Settlement Commission noted that there are no other mala fides. Thus, on facts, the Settlement Commission has taken a decision on the first respondent s application, wherein the first respondent has accepted the entire duty liability and also noted the fact that after the first respondent agreed for the appropriation, only after a period of about three years, show cause notice was issued. Thus, in the light of the factual finding recorded by the Commission, this Court exercising jurisdiction under Article 226 of the Constitution of India, will not act as if it is a Second Appellate Authority over the orders passed by the Commission, in the absence of an perversity in the order. - Decided against the Revenue

Summary

Issues:
Challenge to order passed by Settlement Commission regarding evasion of central excise duty on passenger car parts.

Analysis:
The Writ Petition was filed by the Commissioner of Central Excise challenging the order passed by the Settlement Commission. The first respondent was accused of evading central excise duty amounting to ?79,09,483 by not including ammortised tool cost in the assessable value of passenger car parts supplied to Ford India Ltd. The evasion was identified through a show cause notice dated 17.6.2003, proposing duty demand and penalties under relevant sections of the Central Excise Act. The first respondent, in response, admitted the duty liability and agreed to appropriate the amount already paid towards the duty demanded. The Settlement Commission, after evaluating the facts and submissions, found that the tooling agreement with Ford India was finalized on 13.7.2000, and the duty was paid promptly on 14.7.2000 and 20.7.2000. The Commission noted the absence of any malafide intent and accepted the first respondent's explanation for the delayed payment, concluding that there was no perversity in the order.

The High Court, in its judgment, emphasized that it would not act as a Second Appellate Authority over the Settlement Commission's decision unless there was a clear error in the order. The Court highlighted that based on the factual findings and reasoning provided by the Commission, it would not interfere with the decision-making process. Consequently, the Writ Petition challenging the Settlement Commission's order was dismissed, and no costs were awarded. The Court's decision was based on the principle of not intervening in the absence of any substantial irregularity or injustice in the lower authority's ruling.