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TMI Blog2018 (8) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... e purchase of machine for the period under dispute. Neither they had paid any interest in respect of the amounts to be paid as price for the purchase of the said machine. Though they had been using the machinery from 1.09.2001 the complete payment in respect of the same was made in thirteen installments upto 31.03.2005. It is also an admitted fact that appellant has not paid any interest to the sister concern against the delay in the payment of the amount towards the purchase of such machinery. Thus amount due to be paid against the said machinery was nothing but an interest free advance given by the sister concern to the appellant. Thus in terms of Rule 6, the notional interest due in respect of these advances need to be added to the transaction value for determination of the assessable value if it can be shown that the these interest free advances have influenced the transaction value in respect of the sister concern and the job charges charged from them were lower than the job charges in respect of other customer. Extended period of limitation - Held that:- It is a fact on record that the matter came to light only when the unit was audited. Thereafter enquiries were made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shown outstanding even on 31.03.2003, and against the said outstanding amount no interest was also being paid or required to be paid. After protracted enquiries, appellant gave the information in respect of the said machinery as follows- i. free usage of machinery for the period from 01.09.2001 to 31.08.2002; ii. purchased by the appellant vide invoice no 1 dated 01.09.2002 and invoice no dated 1.12.2002 for an amount of ₹ 1,62,28,661/-; iii. payment against the said purchases made was done in thirteen installments and full payment being made on 31.03.2005; iv. no interest was paid by them in respect of the delayed payment of the said amount to their sister concern. 2.2 It was also observed the job charges recovered by the appellants from their sister concern were considerably lower than the job charges, charged from the other customers. Hence department was of the view that job charges, charged by the appellant from their sister concern were influenced for the reason of free use of the machinery allowed by the sister concern initially and subsequently interest free outstanding amounts in the book of accounts towards the purchase of the said machinery. Hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Etc Vs Union of India 1989 (39) ELT 493 (SC) Mech Form Vs CCE Daman 2014 (309) ELT 493 (T) CCE Mumbai III Vs Paper Products Ltd 2009 (242) ELT 98 (T) CCE Mumbai III Vs ISPL Industries 2003 (154) ELT 3 (SC) CCE Coimbatore Vs Shanti Gears Ltd. 2007 (219) ELT 211 (T) Hindalco Industries Ltd Vs CCE Allahabad 2003(161) ELT 346 (T) Denso Kirloskar Industries Pvt Ltd Vs CCE Bangalore 2005(190)ELT204(T) Metachem Metal Industries Vs CCE Kolkata I 2005(191)ELT 392(T) Commissioner Vs Laxmi Precision Tools Ltd. 2004(163)ELTA65(SC) Motorola India (P) Ltd Vs CCE Bangalore 2007 (209) ELT 86 (T) Escorts JCB Ltd Vs CCE Delhi II 2002 (146) ELT 31 (SC) Commissioner Vs FAMM Ltd 2007(217)ELTA77 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation under Central Excise was changed and transaction value was made the assessable value for the purpose of levy of excise duty. Simultaneously the valuation rules were also amended and new set of rules named Central Excise Valuation (Determination of Price of Excisable Goods), 2000 introduced. In terms of the rule 6 of said rules, following is provided- Rule 6. Where the excisable goods are sold in the circumstances specified in clause (a) of sub section (1) of section 4 of the Act except the circumstance where the price is not the sole consideration for sale, the value of such goods shall be deemed to be the aggregate of such transaction value and the amount of money value of any additional consideration flowing directly or indirectly from the buyer to the assessee. Explanation 1 - For removal of doubts, it is hereby clarified that the value, apportioned as appropriate, of the following goods and services, whether supplied directly or indirectly by the buyer free of charge or at reduced cost for use in connection with the production and sale of such goods, to the extent that such value has not been included in the price actually paid or payable, shall be treated to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue in respect of the customer who has tendered such advance. The explanation also provides that the test for determination whether such advance has influenced fixation of price/ transaction value with in respect of such customer can be charging of lower price for the same good from him in comparison to other customers. The said principle which has been incorporated in the Rule 6 of Valuation Rules of 2000, has been approved by the Apex Court and tribunal in series of decisions as follows: i. Metal Box India Ltd Vs CCE [1995 SCC (2) 90] 10. So far as Contention 2 is concerned, it is true that Ponds (1) Limited was almost a wholesale buyer of the appellant's goods, namely, metal containers manufactured by it as it was lifting 90 per cent of the total production of the appellant. For that purpose huge amounts were being advanced free of interest by Ponds (1) Limited to the appellant. When Ponds (1) Limited was given 50 per cent discount from normal price then the material aspect that Ponds (1) Limited had advanced large amounts free of interest had necessarily entered into consideration between the parties. Therefore, special treatment was given by the assessee to Pon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to the appellant free of interest for purchasing raw materials and accessories for manufacturing the containers which were ultimately sold by the appellant to Ponds (1) Limited. The Tribunal has also noted the reasoning of the Assistant Collector on this aspect to the effect that the extent of such deduction in the price can reasonably be attributed to the interest amount payable on the advance which M/s Metal Box India Limited had obtained from any other source with interest-bearing loan, would have been loaded on the cost of manufacture and sale price of the metal containers naturally increasing the concessional price charged from Ponds (1) Limited. 11. On the facts on record, therefore, it must be held that the Tribunal was perfectly justified in taking the view that charging a separate price for the metal containers supplied to M/s Ponds (1) Limited could not stand justified under Section 4(1)(a) proviso and, therefore, to that separate price charged from the Ponds (1) Limited, the extent of benefit obtained by the assessee on interest-free loan was required to be reloaded by hiking the price charged from M/s Ponds (1) Limited to that extent. Contention 2 also, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on to the customers of the assessee. It has been held: Section 4(1)(a) that normal price would be price which must be the sole consideration for the sale of goods and only under such a situation subsection (1)(a) would come into play. If the price in a particular transaction is not the sole consideration flowing directly or indirectly from the buyer to the assessee-manufacturer, either in cash or any other form, the additional consideration quantified in terms of money value is to be added to the price declared by the assessee for determining the normal price of the goods. We therefore, find that the main basis of adding the notional interest in assessable value of goods was on account of interest free loan which factor was responsible for determination of price between the parties namely, discount of 50% i.e. the price other than the normal price. There came to be two prices one for those who may not have advanced any interest free loan to the manufacturer and the other for Ponds (I) Limited which was a bulk purchaser to the extent of nearly 90% of the production for which purpose advance was also made available to the manufacturer without interest. The fact of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice charged uniformly from both sets of the buyers would still not be a normal price. 11. It is clear that the mere fact of making an interest free advance by a buyer to the manufacturer, by itself will not be a sufficient ground to reload the assessable value with notional interest. It would be necessary for the revenue to show that such advance has influenced in the lowering of the price and that it is not depicting the normal price of the goods. There may be different reasons for taking advances, as indicated above in the earlier part of this judgment. Learned counsel for the appellant submits that all that the revenue has to show is that interest free advance has been made by the buyer to the manufacturer which would lead to a presumption that it is to the advantage of the manufacturer having influenced the fixation of price as well. We, however, fail to appreciate the submission made on behalf of the revenue for drawing a presumption that fixation of price is influenced by such an advance. In this connection, we may refer to the Board s circular of 1998 quoted earlier, clause (iii) of which clearly provides that if there is no difference in the selling price for both ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n value in respect of the sister concern and the job charges charged from them were lower than the job charges in respect of other customer. 6.2 In the show cause notice it has been stated that It was seen during the course of the EA 2000 Audit that the job charges charged by the assessee to M/s Divya Textiles for processing of the fabric were on the lower side as compared to the job charges charged from other customers. Hence it appears that the job charges were influenced by the free use of the machinery of M/s Divya Textiles by the assessee and the subsequent interest free sale of such machinery by M/s Divya Textiles to the assessee as no interest had been charged towards delayed payment of such huge outstanding amount against the purchase of the said machines. 6.3 After consideration of the submissions made by the Appellant leaned adjudicating authority, found that 16. I find that assess has not submitted any evidence that their processing charges for Divya Textiles were not lower as compared to other. Thus this allegation in the show cause notice is correct. The appeal filed by the Appellant before Commissioner (Appeal) was dismissed by Commissioner (Appeal) for n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction value for determination of the correct assessable value in terms of Rule 6 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. 7.1 On Limitation Counsel for appellant relying on the Apex Court decision in case of CCE Mumbai IV Vs Damnet Chemicals Pvt Ltd [2007 (216) ELT 3 (SC)] and Pahwa Chemicals Pvt Ltd Vs CCE Delhi [2005 (189) ELT 257 (SC)] argued that extended period of limitation cannot be invoked in this case as they have not willfully suppressed any fact from the department and they had no intention to evade payment of duty. Thus they challenged the finding of the Commissioner (Appeals) and Adjudicating Authority on this account. It is a fact on record that the matter came to light only when the unit was audited. Thereafter enquiries were made by the department from the appellant and as recorded in para 2 of the Show Cause Notice the entire details were made available only after protracted communications. 7.2 It is recorded in the show cause notice that During the checking of the financial accounts of the assessee as on 31.03.2003 the amount of ₹ 1,62,28,661/- payable to M/s Divya Textiles on account of purchase of aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the production register RG 1. Further finding was that it was not by inadvertence. There could be no other inference if it was not by inadvertence, then deliberate, then it is not in the realm of inaction of the assessee but with the objective of a gain, which in other words would be conscious withholding of the information. Thus unhesitantly we conclude, on the facts of this case, proviso to section 11 would be applicable, hence, show-cause notice is held to be within time. 7.4 Applying the above ratio to the facts of the case before us, the invocation of extended period of time to confirm the tax demand cannot be faulted at all and we hold accordingly. The Honourable High Court of Gujarat in Salasar Dyeing and Printing Mills P. Ltd. v. Commissioner of Central Excise and Customs, Surat-I [2013] 290 ELT 322 (Guj) has held that: 15. Upon reading the relevant provisions contained in section 11A of the Act, it becomes clear that in the case of duty which has not been levied or paid, or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion, wilful misstatement, suppression of facts, etc., period of service of notice on the person chargeabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was under a bonafide impression that no duty was leviable on the goods; the full quantity of disputed goods was used captively and, therefore, proforma credit / modvat credit was available in respect thereof and, therefore, there was no intent to evade payment of duty. In support of the aforestated submissions, it was urged that suppression or breach of rules by itself would not amount to intention to evade; that some positive act of deliberate suppression or breach of rules was required to be shown by the department; that, if the assessee showed that credit available to it was equal to the demand then there may not be the case of intention to evade payment of duty. In this connection, reliance was also placed on the judgments of this Court in Amco Batteries Ltd. v. Collector of Central Excise, Bangalore reported in 2003 (153) ELT 7; Padmini Products v. Collector of Central Excise reported in 1989 (43) ELT 195; and Formica India Division v. Collector of Central Excise reported in 1995 (77) ELT 511. We do not find merit in the above contentions. In this matter, we are concerned with the application of the above judgments to the facts of this case. The words wilfulness a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 641] wherein it was observed as under: The cause of the community deserves better treatment at the hands of the Court in the discharge of its judicial functions. The Community or the State is not a persona non grata whose cause may be treated with disdain. The entire community is aggrieved if economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the Community can be manifested only at the cost of forfeiting the trust and faith of the community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye, unmindful of the damage; done to the National Economy and National Interest, as was aptly stated in State of Gujarat v. Mohanlal Jitamalji Porwal and Anr., AIR (1987) 1321) . 9.2 Kerala High Court has in case of Assistant Commissioner of Central Excise Vs. Krishna Paduval 2006 (1) STR 185 (Ke ..... X X X X Extracts X X X X X X X X Extracts X X X X
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