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TMI Blog2015 (8) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ful misstatement and suppression of facts on the part of the appellant. The fact that they paid the duty in the month of February, to our mind, is of no consequence as once the Assistant Director (Costs) came into the picture and went into the various costing details, the appellant was left with no option. Under the circumstances, we are of the considered view that the ingredients of Section 11AC are satisfied and, therefore, the penalty under Section 11AC is leviable. - Decided against the assessee. - Appeal Nos. E/403 & 3432/06-Mum, E/CO/58/07-Mum - - - Dated:- 13-7-2015 - Hon ble Mr. P.K. Jain, Member (Technical) And Hon ble Mr. S.S. Garg, Member (Judicial),JJ. For the Appellant : Shri V.S. Nankani, Sr. Advocate, with Shri Anay Banhatti, Advocate, and Shri Supreme Kothari, C.A. For the Respondent Shri V.K. Agrawal, Additional Commissioner (AR) ORDER Per: P.K. Jain There are two appeals filed by the appellant and cross objections filed by the Commissioner of Central Excise, Aurangabad. The first appeal is with reference to the order passed by the Commissioner of Central Excise, Mumbai vide order-in-original No. 12/2005 dated 2.11.2005. The second appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year 2004 was determined. The actual cost of production was certified by the Cost Accountant vide certificate dated 18.2.2005 and pursuant to such ascertainment of actual cost of production by the appellant, the appellant calculated the differential duty and interest and made payment of ₹ 59,76,526/-. Supplementary invoices dated 19.2.2005 and 25.2.2005 were issued by the Dharavi unit to the Aurangabad unit and based upon the supplementary invoices, the Aurangabad unit took the credit of the same. 4.1 The learned senior counsel submitted that in the first appeal, the issue to be decided is whether penalty under Section 11AC of the Central Excise Act and Rule 25 of the Central Excise Rules is imposable. The learned senior counsel submitted that there was no suppression with intent to evade payment of duty. In support of his contention, he submitted that at the beginning of every year, the appellant has provided to the excise authorities the details of standard cost of production along with assessable value details as certified by the Cost Accountant. In this case also, the appellant submitted such details in 2003. Thereafter in August 2003, these revised to reduce profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 (Tri.-Mum.). It was also submitted that the facts of the case of Automotive Stampings and Assemblies Ltd. vs. CCE reported in 2015-TIOL-836-CESTAT-MUM are distinguishable for various reasons and cannot be applied into the fact of the present case as there the goods were being sold to the buyer, which is not so in the present case. It was also submitted that in the case of Polycab Cables Pvt. Ltd. vs. CCE reported in 2006 (205) ELT 898 (Tri.-Mum.) and Jaising Wires Pvt. Ltd. vs. CCE, it has been held that where the additional duty has been paid on its own, penalty was not imposable. 4.2 As far as the second appeal is concerned, it was submitted that the Commissioner of Central Excise, Aurangabad has denied the cenvat credit for the Aurangabad unit in terms of Rule 9(1)(b) of the Cenvat Credit Rules. It was submitted that this is against the decision of the Hon ble Karnataka High Court in the case of Karnataka Soaps Detergents Ltd. vs. CCE reported in 2010 (258) ELT 62 (Kar.) Similar view has been taken in the following two cases:- (i) CCE vs. Jairaj Ispat Ltd. reported in 2009 (245) ELT 118 (AP), (ii) Godrej Industries Ltd. vs. CE reported in 2008 (232) ELT 108 (Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no reason for them to suddenly bring down the assessable value w.e.f. January 2004. Appellant was expected to doubly check before such reduction. Even when in the month of August, the department asked them the reasons for fall in revenue, initially no reply was sent. After the second letter where various details were specifically asked, the appellant did reply. However, a perusal of the reply will indicate that they tried to give vague answer and mislead the department and insisted that the values declared are correct. It is only when the department initiated enquiries with the specialist/expert i.e. Assistant Director (Costs) and he asked the details from the appellant that the correct values were determined and the differential duty was paid by them in the month of February. He submitted that the whole conduct of the appellant indicates that there were misstatement and suppression of facts with wilful intention to evade duty. Under the circumstances, penalty imposed under Section 11AC is correct. Further, since the goods are liable to confiscation, the penalty imposed under Rule 25 is also in order. It was also submitted that if in January 2004, figures were tentative, appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d reply would indicate that the appellant justified the reduction in revenue due to lower assessable value which in turn was due to reduction in material cost, reduction in cost of labour, reduction in variable overheads and reduction in fixed overhead. The reply was a very general reply. Since the Revenue did not find the reply to be correct, it was decided to investigate the cost hence value through the the specialized/expert officer i.e. Assistant Director (Costs). Thereafter the Assistant Director (Costs) visited the unit and it was only thereafter the appellant computed the cost of production properly. A comparative chart indicating the declared assessable value before 2.1.2004 and declared value as on 2.1.2004 and the assessable value w.e.f. 2.1.2004 as ascertained after Assistant Director (Costs) came into picture are as under:- Sr. No. Description Assessable Value 6.8.2003 2.1.2004 18.2.2005 1 GUT 152 CM1 7.29 4.44 7.89 2 GUT 152 CM2 8.46 4.92 8.74 3 GUT 152 CM3 8.99 5.28 9.37 4 GUT 152 CM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in January 2004, they had submitted the Cost Accountant s certificate based upon the estimation and they were to give the final figures after the completion of the year. We do not find any substance in this plea of the learned senior counsel. If that was so, the correct procedure would be to follow the provisional assessment under Rule 7 of the Central Excise Rules, 2002. Further, the certificate dated 2.1.2004 or the letter dated 7.1.2004 nowhere says that these are provisional figures and will be revised after the calendar year is over and the final values will be submitted thereafter. Even in 2003, no such exercise was carried out. In view of this position, this contention is also rejected. Incidentally, in the case of Karnataka Soaps Detergents Ltd. (supra), the Hon ble Karnataka High Court, which was almost in the similar facts and circumstances, invocation of the extended period of limitation was upheld. Ingredients for invoking extended period are similar to Section 11AC. Hence penalty under Section 11AC is correctly imposed. 6.3 With the new cost of production it was found that there has been a short levy of ₹ 54,97,281/-. The said amount along with interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not account for any exciseable goods produced or manufactured or stored by him; or (c) engages in the manufacture, production or storage or any exciseable goods without having applied for the registration certificate required under section 6 of the Act; or (d) contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty, then, all such goods shall be liable to confiscation and the producer or manufacturer or registered person of the warehouse or a registered dealer, as the case may be, shall be liable to a penalty not exceeding the duty on the exciseable goods in respect of which any contravention of the nature referred to in clause (a) or clause (b) or clause (c) or clause (d) has been committed, or [rupees two thousand] whichever is greater. (2) An order under sub-rule (1) shall be issued by the Central Excise Officer, following the principles of natural justice. In the present case, the assessee has removed the goods without correct determination of value and hence the duty and, therefore, penalty imposed is in order. 7. Coming to the second appeal of the appellant, we agree with the learned se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the course of wholesale trade. In other words, normal price, which in turn referred to goods being ordinarily sold in the course of wholesale trade at the time of removal, constituted the basis of the assessable value. Rule 57CC(1) proceeds on the basis that the manufacturer has taken credit of the specified duty on common inputs which needs to be reversed at eight per cent (i.e. the manufacturer needs to debit an amount equal to eight per cent of the price of the exempted final product charged for the sale of such goods. This amount is a presumptive sum calculated at eight per cent of the price charged. The rate of eight percent is the measure to calculate the presumptive sum. Further, reading Rule 57CC(1) with Rule 57CC(8) one finds that entire rule is based on deemed price and recovery of presumptive amount and, therefore, in our view, the words price charged at the time of sale must be read as eight per cent of the value of the exempted goods . Our interpretation stands supported by the Instructions issued by the Central Board of Excise and Customs based on the Circular No. B-42/1/96-TRU, dated 27-9-1996. This is where Section 4 and the Valuation Rules, 1975 come into play. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause 83 of the Finance Bill (No. 2), 2004, which by virtue of the declaration made in the said Finance Bill under the Provisional Collection of Taxes Act, 1931 (16 of 1931), has the force of law; (vii) The additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under clauses (i), (ii), (iii), (iv), (v) and (vi) above; and (viii) The additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of 2003). Paid on any inputs or capital goods received in the factory on or after the first day of March, 2002, including the said duties paid on any inputs used in the manufacture of intermediate products, by a job-worker availing the benefit of exemption specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 214/86-Central Excise, dated the 25th March, 1986, published vide number G.S.R. 547(E), dated the 25th March, 1986, and received by the manufacturer for use in, or in relation to, the manufacture of final products, on or after the first day of March, 2002. Explanation - For the removal of doubts it is clarified that the manufacturer of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13(E), dated the 25th June, 2003], and No. 71/2003-Central Excise, dated the 9th September, 2003 [G.S.R. 717(E), dated the 9th September, 2003], Shall respectively be utilized only for payment of duty on final products, in respect of which exemption under the said notifications No. 39/2001-Central Excise, dated the 31st July, 2001, No. 56/2002-Central Excise, dated the 14th November, 2002, No. 57/2002-Central Excise, dated the 25th June, 2003, and No. 71/2003-Central Excise, dated the 9th September, 2003, is availed of.] [(4) When inputs or capital goods, on which CENVA1 credit has been taken, are removed as such from the factory, the manufacturer of the final products shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in rule 7.] [(4A) Notwithstanding anything contained in these rules,- (a) ..................... (b) ....................... (c) ........................ (5) The amount paid under sub-rule (4) shall be eligible as CENVAT credit as if it was a duty paid by the person who removed such goods under sub-rule (4). (6) Notwithstanding anyth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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