Commissioner Of Central Excise And ... vs M/S. Terraco India Pvt. Ltd

[Arising out of Order-in- Appeal No. BPS(387)/2004 dtd. 25/11/2004 passed by the Commissioner of Central Excise & Customs(Appeals), Aurangabad]

For approval and signature:

Honble Mr. P.K. Jain, Member(Technical) Honble Mr Ramesh Nair, Member(Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities? =======================================================

Commissioner of Central Excise and Customs, Aurangabad : Appellants

VS

M/s. Terraco India Pvt. Ltd. : Respondent

Appearance

Shri. V. K. Shastri, Asst. Commissioner(A.R.), for the Appellants None for the Respondent

CORAM:

Honble Mr. P.K. Jain, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 29/1/2015 Date of decision /2/2015

ORDER NO.

Per : Ramesh Nair

These two Appeals of the Revenue are directed against Order-in- Appeal No. BPS(387)/2004 dtd. 25/11/2004 passed by the Commissioner of Central Excise & Customs(Appeals), Aurangabad, wherein two orders in original were set aside except upholding the confirmation of demand amounting to Rs. 3,241/- and Rs. 31,927/- being the duty involved in the raw material as well as finished goods respectively found short confirmed in the Order-in-Original no 70/CEX//Jt. Comm/2003 dated 30/6/2003. The fact of the case is that the respondent, M/s. Terraco India Pvt. Ltd (TIPL) is engaged in the manufacture of Cement Paints and grouts falling under Chapter sub heading 3209.10 and 3209.90 respectively of Central Excise Tariff Act, 1985 under brand name PAGEL, which is owned by M/s. Pagel Concrete Technologies Limited(PCTL). First show cause notice bearing no. V(32) 15/279/ADJ/2001/3041 dated 1/05/2001 for the period April 1996-March 2000 demanding duty of Rs. 14,21,513/- and another show cause notice V(32)/15/5/ADJ/2002/1591 issued on 20/3/2002 for the period April 2000-March 2001 demanding duty of Rs. 2,63,426/-.

The demand of excise duty was raised on the allegation that the respondent M/s. TIPL and brand name owner M/s. PCTL are related person inasmuch as the respondent was supplying the branded goods at lower rate to brand name owner i.e. M/s. PCTL and said related person subsequently sell excisable goods manufactured by respondent on higher price. The reasons for holding both the companies as related person given in the show cause notice are that Shri. Jai Daulat Advani is Managing Director in M/s. TIPL and he is also Chairman of M/s. PCTL; that Shri Jai Daulat Advani through his substantial participation in both the companies rendered direct control on both by holding majority of equity transferring the technology and brand name to M/s. TIPL; Shri Jai Daulat Advani and his relative are holding majority shares in both the companies. The demand was proposed on the difference in sale price from M/s. TIPL to M/s. PCTL and sale price of the same goods by M/s. PCTL to their buyers. In the adjudication the demand raised in the show cause notice were confirmed. Aggrieved by the adjudication order the respondent filed an appeal before the Commissioner(Appeals), who after examining the issue both on merit as well as on time bar ground allowed the appeal of the respondent.

Aggrieved by the order of the Ld. Commissioner (Appeals) the Revenue is before us.

2. Shri. V.K. Shastri, Ld. Asst. Commissioner(A.R.) appearing on behalf of the Revenue submits that relationship between M/s. TIPL and M/s. PCTL clearly established inasmuch as Managing Director Shri. Jai Daulat Advani of M/s. TIPL, is also Chairman of M/s. PCTL. Shri. Jai Daulat Advani alongwith his relative holding majority shares in both the companies. The brand name of PAGEL was allowed to be used by M/s. TIPL. Such branded goods manufactured by M/s. TIPL is purchased by PAGEL at very lower value as compared to the prices at which the goods are sold to the independent customer. He submits that all these factors are more than sufficient to hold that both are related person and therefore the price is not the sole consideration. It is his submission that the value at which the goods is sold by the appellant to the PAGEL is not correct transaction value, however sale value of the same goods sold by M/s. PCTL to independent customer is correct transaction value and the duty is chargeable on sale value of PAGEL. He submits that the adjudicating authority has correctly confirmed the demand, however, the Ld. Commissioner (Appeals) wrongly dropped the demand. As regard demand being time bar as held by the Ld. Commissioner (Appeals), he submits that extended period is invokable in the present case. He submits that the appellants failed to disclose the quantum of share holding in both the companies by Shri. Jai Daulat Advani and his family/relatives. The respondent also failed to disclose prices charged by M/s PCTL to subsequent buyers. They also not brought to the notice of the department regarding mutuality of interest in both the companies. Therefore demand for extended period is sustainable and findings of the ld. Commissioner(Appeals) in this regard is not correct.

3. None appeared on behalf of the respondent

4. We have carefully considered the submissions made by ld. A.R. and perused the record.

5. The Ld. Commissioner (Appeals) in his order allowed the appeal of the respondent on both the counts i.e. on the merit of the case and the time bar. On careful perusal of the records and finding of the Commissioner (Appeals), we are of the view that the appeals can be disposed of on the ground of time bar itself. As regard the time bar, the Commissioner (Appeals), in his order given following findings:-

21. Next comes the question of limitation involved in the subject demands. It may be seen that the department has proposed to recover differential duty of Rs. 14,21,513/-and Rs. 2,63, 426/- during the periods from April 1996 to March 2000 and from April 2000 to March 2001 respectively. The SCN in the former case was issued on 01.05.2001 and in the later cae on 08.03.2002 by invoking extended time period clause of proviso to Section 11A(1) of the Act. The Appellants contentions are that the demands in question were barred by limitation inasmuch as their unit profile had been submitted to the Superintendne, Central Excise i/c of the unit indicating that their unit had been visited and audited in March 1996-97. They were also submitting the RT-12 return regularly alongwith duty paying documents. Therefore, there was no conscious or dliberate withholding of any information of their part at the most there might be some inaction. There was no willful withholding of any information with intent to evade payment of duty on their part. Moreover, during the course of correspondence they had also addressed a letterdated 22.09.1998 to the Superintendent (Preventive) Aurangabad indicating that their company and Pagel were independent parties and was functioning separately. Both of these companies had individual Board of Directions with two common Directors Viz. Shri. D.J.Advani and Shri J.D. Advani. Therefore, the show cause notice covering the period fromApril, 1996 to March 200 was hit by limitation under section 11A of the Act. To support their say, they placed reliance upon the following case laws:-

(1) Collector Vs. Camphor Drugs Liniments-1989(40)ELT 276(SC) (2) Padmini Products  1989(43) ELT 195(SC) (3) Tamil Nadu Housing Board-1994 74 ELT 9 (SC) (4) Pushpam Pharmaceuticlas Co. 1995(78)ELT 401 (5) Cosmic Dye Chemical  1995(75) ELT 721

22. I find adequate force and substance in the Appellants aforesaid contentions and arguments. Once the fact regarding common directions in both the companies was brought to the knowledge to the department through the Apellants letter dated 22/9/1998, the extended time period clause could not have been pressed into service for demanding any differential duty for any period subsequent to 22/09/1999. The extended time period could have been invoked for 5 years period prior to 22/9/1998. But in that case also, since the Appellants unit has regularly been audited by the internal as well as external audit and no such discrepancies were ever noticed by the department, the extended time period clause may not be invoked in such cases too. Therefore, on limitation also there seems to be no case for the department.

From the above findings it is clear that the suppression of fact or any other ingredients of proviso to 11A is not established therefore the demand is time bar. As regard the contention of the Revenue that the respondent has not disclosed mutuality of interest, share holding pattern and sale price of M/s. PCTL to their customer, we observe that, it is admitted fact, that the respondent submitted the unit profile to the Superintendent Central Excise in charge of the unit. The respondents records had been audited in the year 1996-97, the respondent also submitted RT-12 returns regularly alongwith duty paying documents. From these documents and information the constitution of the company and valuation of the goods and share holding patter can be clearly revealed from the profile of the company, dutiable documents and RT-12 returns. The respondent also submitted the fact of common directors in both the companies to the department through their letter 22/9/98. As regard non disclosure of sale prices of M/s. PCTL to their customer, the respondent is not under legal obligation to disclose or produce sale prices of 3rd party to their jurisdictional Central Excise authority. We also observe that the present case involved interpretation of law on valuation of goods and related person. It is also fact in the case that department has not made out case or produce any evidence that there is any financial flow back from each other company ie. M/s. TIPL to M/s. PCTL and vise-versa. The show cause notice for the period of Apr 1996 Mar 2000 was issued on 1/5/2001 and Second Show cause notice for the period of Apr 2000-march 2001 was issued on 8/3/2002. In both the case the show cause notices were issued after one year form the completion of the each period. Therefore both the show cause notices are clearly time bar. However as regard confirmation of demand of Rs. 3,241/- and Rs. 31,927/-, since the same is not under challenge the same stand maintained. In view of our above discussion and clear findings by the Ld. Commissioner(Appeals) on the point of time bar we are of the considered view that the impugned order, as much as, demand dropped by the Commissioner (Appeals) on time bar ground is maintainable however we do not give any finding on the point of merit and the same is kept open. The Revenues appeals are dismissed in the above terms.

(Operative part pronounce in the court on /2/2015)

P.K. Jain Member (Technical) Ramesh Nair Member (Judicial)

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