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TMI Blog2018 (7) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... or manufacture of Custom made conveyor belts - such specific engineering design and drawing are pre-requisite for manufacturing the conveyor belts and therefore the value of such drawing and designs is intrinsic to the value of the product namely conveyor belts, manufactured by the appellant. Since these specific designs were pre-requisite for the manufacture and sale of their product ,therefore, the value of such engineering drawing and designing will certainly form the part of assessable value as provided under Section 4 of the Central Excise Act, 1944 - decided against assessee. Since the assessee has already taken service tax registration for the same activity and have been paying service tax, whether they need to pay Central Excise duty again on the same activity and whether the charges of suppression, mis-statement, fraud or mis-representation are invocable in this case for demanding duty under the extended time proviso of Section 11A(1) of the Central Excise Act, 1944 and whether the penalty under Section 11AC is also imposable on them? - Held that:- The tax under any statute is to be assessed and paid as per the requirement of that statute. Even though the assessee mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various buyers such as M/s. NTPC etc. The goods so supplied on order were tailor made as per the specific requirements of the customer. Keeping in mind the specific requirements and specific needs of the customers for manufacturing the Conveyor Belts, the appellant have been undertaking work of drawing and engineering designing of such conveyor belts as per the specific requirements of various buyers. The appellant has been charging the buyers for drawing and engineering designing of such conveyor belts separately. The Department has been of view that the charges recovered by the appellant from their buyers should have formed the part of the assessable value under Section 4 of the Central Excise Act, 1944 as engineering designing and making drawing of same are intrinsic part of the manufacture of the product and thus of value of excisable goods i.e. Conveyor Belts. 2. On the above premise, a show cause notice came to be issued demanding differential Central Excise Duty of ₹ 49,15,534/-. The Show Cause Notice had also asked for interest under Section 11AB and imposition of penalty as provided under Section 11AC of the Central Excise Act, 1944. The matter was adjudicated and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justifiable on them. Ld. Advocate for the appellant have taken us through the judgement in case of K.R. Packaging Vs. Commr. of Central Excise and Service Tax, Meerut-I [2017 (51) STR 438 (Tri.-Del.) wherein this Tribunal has held that: Though the activity undertaken by the appellant may amount to manufacture, however, since the Department has accepted the Service Tax paid by the assessee on the same activity, the Department cannot go back and ask for Central Excise duty on the same activity under the category of manufacture . The relevant portions of K.R. Packaging (supra) are reproduced below: ......3. From the record, it appears that during the period in dispute the assessee- appellants were paying regularly the Service Tax by declaring that the activity in question was merely a service. The Department had accepted the Service Tax without raising any objection. The assessee-appellants were having Service Tax registration and regularly submitting the half yearly returns for payment of the Service Tax. It is only on 30-3-2010 when the excise declaration was obtained by the assessee- appellants and prior to it, was subject to Service Tax. Further, the product manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is vital to mention that in the instant case, the assessee-appellants were regularly paying the Service Tax and the Department had never raised any objection to the same for a considerable period, which implied that the Department was in agreement with the contention of the assessee-appellants that their packaging activity was taxable under the services rendered taxable by the Finance Act, 1994. 6. But the fact remains that as per the definition, it appears that the packaging activity done by the assessee-appellants did not fall within the ambit of packing services and was, therefore, not liable for Service Tax by virtue of being manufacture as already discussed. On the basis of above, they have contended that firstly, since the Department has already accepted the payment of Service Tax on the same activity of engineering drawing and designing therefore, they cannot ask the appellant for Central Excise duty on the value of the same by including it in the assessable value of their manufactured conveyer belts. Secondly, it has also been contended that since they have all along been filing Service Tax Return for the same activity with Department and therefore th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even if tax is wrongly remitted that would absolve the parties from paying the service tax if the same is otherwise found payable and a liability accrues on the assessee. The charges paid by the subscribers for procuring a SIM Card are generally processing charges for activating the cellular phone and consequently the same would necessarily be included in the value of the SIM Card. 8. We have heard both the sides and perused the appeal record. We are of the opinion that the assessable value of the manufactured products as provided under Section 4 of the Central Excise Act, 1944 includes all the cost elements which are prior to the clearance of the manufactured goods from the factory gate in the normal course of trade. In this case, since the engineering drawing and designing of the conveyor belts was to the specific requirements of each customer, for this purpose before undertaking manufacturing activity of conveyor belts, a detailed exercise were undertaken by the appellant with their customers/buyers to ascertain their requirements and then engineering drawing design were made for manufacture of Custom made conveyor belts. We are of the opinion that such specific enginee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure printing involved image design and processing work. For the image design and art work, these charges have been recovered though this work could be done from outside advertising agencies. Photoengravings of design and art work on cylinder is a process which is done by a division of the appellant. The processing charges as mentioned in the invoice do not have a relation with the work of image design. In the cost sheets there is no mention of any charges recovered by debit notes. Hence, the cost sheets submitted by the appellant do not relate to amortization of charges recovered for Development and Maintenance of Design and Art work The customers of the appellants paid the price as reflected in invoice of flexible packaging and plus charges on account of Development Maintenance of Design and Art work . If the charges were included in the invoice value of the finished product no customer will pay these prices against such debit notes again. This would go to prove beyond doubt that the amount charged by raising debit notes on account of Development Maintenance of Design and Art work are not incorporated in the value of finished product. We therefore accordingly uphold the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Card. 11. Thus, we hold that assessee appellant should have included the charges of engineering drawing and design in the assessable value of conveyor belts as per the provisions of section 4 of Central Excise Act, 1944. We also find that payment of service tax on the charges recovered from the buyer of engineering drawing design is not a proper compliance of provisions of Central Excise Act, 1944 and thus short payment of central excise duty stands recoverable. Now we come to the question whether the provisions of Section 11A of Central Excise Act, 1944 demanding duty under the extended time proviso are invocable in this case or not ? 12. Before going to the above question let us have a relook at the facts of the matter. It is a matter of record that the appellant have taken registration for service tax under the category of engineering drawing and designing and have been filing the service tax return paying service tax periodically with the department. 13. The Section 11A (1) under the proviso provides that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded by reason of fraud, collusion or any wilful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the provisions of this Act or Rules are again qualified by the immediately following words with intent to evade payment of duty . It is, therefore, not correct to say that there can be a suppression or mis-statement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11A. Mis-statement or suppression of fact must be wilful. In the case of M/s. CONTINENTAL FOUNDATION JT. VENTURE Versus COMMR. OF C. Ex., CHANDIGARH-I, [2007 (216) ELT 177 (S.C.) The Hon ble Apex Court held as under; The expression suppression has been used in the proviso to Section 11A of the Act accompanied by very strong words as fraud or collusion and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11A the burden is cast upon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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