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TMI Blog2023 (2) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... such that the goods would be sold at a lesser price by declaring them as scrap and the balance amount would be paid by Honda India by terming the amount as compensation‟. Thus, the amount received towards so called compensation‟ was to be included in the transaction value. The Tribunal also recorded such a finding and the Supreme Court has confirmed this finding. The amount received by the applicant from Honda India was not even shown in the ER-I Returns filed by the applicant. Much emphasis has been placed by the learned counsel for the applicant on the balance sheet of the applicant for the financial year 2011-12. All that is recorded in the said balance sheet is compensation from customers- Rs.49,156,375/- . It cannot be gathered from this statement in the balance sheet that this amount was received by the applicant from Honda India towards compensation for the cancellation of the agreement to supply the spare parts which were ultimately sold as scrap. The finding of the Tribunal that it transpires from the business arrangement between the appellant, Honda India and the buyers of scrap that the appellant had received some amount from the buyers of scrap and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) recorded a categorical finding that the amount received by the appellant from Honda India should be included in the transaction value since the amount received was for those very auto parts which were to be sold to Honda India but were ultimately sold by the appellant to buyers of scrap since the contract was cancelled. The Commissioner (Appeals) also observed that this was actually a business arrangement between the appellant, Honda India and the buyers of scrap to evade payment of excise duty on the amount called as compensation‟ and infact Honda India actually paid some amount to the appellant and some amount was received by the appellant from the buyers of scrap. Thus, the amount received by the appellant from Honda India, which the appellant termed as compensation, was liable to the included in the value of the scrap. 4. The Tribunal, by decision dated October 13, 2021, dismissed the appeal finding that there was no error in the order passed by Commissioner (Appeals). The Tribunal also recorded a finding that it clearly transpired from the business arrangement between the appellant, Honda India and the buyers of scrap that the appellant received some amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirmed. 7. The appellant has, accordingly filed this application claiming that the extended period of limitation contemplated under section 11A(4) of the Central Excise Act, 1944 [the Excise Act] could not have been invoked for confirming the demand of excise duty and that penalty under section 11AC (1) (c) of the Excise Act could also not have been imposed. 8. Shri Puneet Bansal, learned counsel for the appellant assisted by Shri Saurav submitted that the extended period of limitation contemplated under section 11A(4) could have been invoked while raising the demand for the period from March 2012 to April 2012 on the ground of suppression. In this connection, learned counsel pointed out that the appellant was under a bonafide belief that compensation‟ received by it from Honda India was not exigible to excise duty because the said amount was not an additional consideration nor such amount was given by the buyers of goods. Learned counsel pointed that transaction of receipt of compensation was recorded in the balance sheet under the head other income compensation from customers and, therefore, there was no suppression as the balance sheet is a public document a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of this Act or of the rules made thereunder with intent to evade payment of duty,- (a) the Central Excise Officer shall, within two years from the relevant date, serve notice on the person chargeable with the duty which has not been so levied or paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice; (b) the person chargeable with duty may, before service of notice under clause (a), pay on the basis of,- (i) his own ascertainment of such duty; or (ii) the duty ascertained by the Central Excise Officer, the amount of duty along with interest payable thereon under section 11AA. (2) xxxxxxxxx (3) xxxxxxxxx (4) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by the reason of- (a) fraud; or (b) collusion; or (c) any wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by any person c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessable value. The assesse appears to have suppressed the Transaction Value of the goods with intent to evade payment of duty as they have never informed the department about the additional consideration in form of compensation collected from the buyers and retained by them. If the Officers of the Anti-evasion of the Central Excise Division-Il Bhiwadi had not detected the said compensation being received in form of additional consideration by the assessee and not paid central Excise Duty on the same, through detailed scrutiny of their records and information gathered from the other sources, the same would have remained undetected. Therefore, extended period of limitation appears to be invocable against the assessee. Therefore, the duty short paid/not paid is recoverable from the assessee under Section 11A(4) of the Central Excise Act, 1944 along with interest under Section 11AA of the Act ibid. The assessee also appears to be liable for penal action under section 11 AC(1) c) of the Central Excise Acl, 1944 for contravening the provisions above. xxxx xxxx 8. And whereas it appears that the assesses has not disclosed the above mentioned facts to the department and ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that there has been a deliberate act by the assessee to suppress the information about the receiving of compensation from HSCIL in as much as they mis-declared the transaction value by not including the compensation amount in contravention of the provisions of the section 4(3)(d) of the Central Excise Act, 1944 read with Rules 6,8,11 of the Central Excise duty. It was incumbent upon the assessee to declare the true transaction value and pay Central Excise Duty on self-assessment. xxxx xxxx 5.7.3. The assessee suppressed the fact of receipt of additional consideration as compensation with intent to evade duty and such facts came to the notice of the department on detailed scrutiny by the officers of Anti-Evasion of the Commissionerate. Thus, the extended period of limitation under provision of section 11A(4) of the Central Excise Act, 1944 was rightly invoked. The act of not disclosing the vital information before the jurisdictional Central Excise authorities was conscious and purposeful acts on the part of assessee. These acts show the contumacious conduct on the part of their part. The penal consequences, accordingly, must follow and I hold accordingly. (em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt in the name of compensation from HSCIL against the goods manufactured by it for HSCIL, therefore, the amount received against the goods manufactured was sum total of the amount received as sale of goods and amount received in the name of compensation. In other words the appellant received amount in respect very same manufactured goods from the buyer (under an invoice) as well as from HSCIL in the name of compensation. Accordingly, CE duty is chargeable on the compensation amount in addition to the amount charged by the appellant for selling impugned goods. (emphasis supplied) 16. It is clear from the order passed by the Commissioner (Appeals) that even though the agreement between the applicant and the Honda India did not have a condition for payment of compensation if the goods manufactured by the applicant were not received by the Honda India, yet the applicant paid compensation for non-lifting of such goods. The Commissioner (Appeals) also noted that the goods were specifically manufactured for Honda India for its 2CV Model, yet they were sold as scrap and that perusal of the sample invoices showed that the buyers of the goods were not scrap dealers. Thus, it w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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