Commissioner Of Central Excise vs M/S Nirma Limited

[ Arising out of OIA-27/2007-AHD-III-CE/DK/COMR-A- dtd 20/03/2007 Passed by Commissioner of Central Excise-AHMEDABAD-III ]

Commissioner of Central Excise-

AHMEDABAD-III - Appellant(s)

Vs

M/s Nirma Limited - Respondent (s)

Represented by :

For Assessee : Shri J Nair, Authorised Representative For Revenue : Shri M A Patel, Consultant

For approval and signature :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. H.K. Thakur, Honble Member (Technical)

1

Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

No 3 Whether their Lordships wish to see the fair copy of the Order?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes

CORAM :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. H.K. Thakur, Honble Member (Technical)

Date of Hearing / Decision : 13/4/2015

ORDER No. A/10764 / 2015 dtd 13/4/2015

Per : Mr.P.K. Das,

Revenue filed this appeal against the order of the Commissioner (Appeals), where the Adjudication order was set aside, as the demand is barred by limitation.

2. The respondents were engaged in the manufacture of Detergent Cake, Detergent Powder, Oleum etc classified under Ch 34,28 and 33 of the Schedule to the Central Excise Tariff Act 1985. They cleared the excisable goods, Sulphuric Acid and Oleum to their sister unit/other units during the year 2004-05 on payment of duty as per Rule 9 read with Rule 8 of the Central Excise Valuation Rule 2000 at 110% of the cost of production of the goods. A show cause notice dtd 31.5.2006 was issued proposing demand of duty of Rs 3,71,511/- alongwith interest and to impose penalty on the ground that they have not correctly determined the value of the goods cleared during the period 1.4.2004 and 30.6.2004. The adjudicating authority confirmed the demand of duty alongwith interest and imposed penalty. By the impugned order, the Commissioner (Appeals) set aside the Adjudicating Authority order on the ground that the demand is barred by limitation.

3. The Learned Authorised Representative for the Revenue submits that the Respondent paid duty on the revised value with effect from 1.7.2004 instead of 1.4.2004. He submits that the respondents have not disclosed these facts to the Department. There is suppression of fact with intent to evade payment of duty. It is also contended that the Commissioner (Appeals) erroneously proceeded on the basis of submission of the Respondent.

4. He submits that the Tribunal in various decisions held that the demand of duty of extended period of limitation would be invoked, as the assessee had not declared values. He also drew the attention of the Bench to the relevant portion of the Adjudication Order. He relied upon the decisions of the Tribunal as under:

a) Tata Iron and Steel Co Ltd vs. CCE., Thane  2104.300.ELT.571 (Tri.Mum.)

b) Commissioner of Central Excise, Kerala vs. Steel Industries Kerala Ltd  2005.188.ELT.33(Tri.Bang.)

c) Noble Detective and Security Services P Ltd vs CST, Ahmedabad  2014.34.STR.299 (Tri.Ahmd)

5. On the other hand the Learned Consultant for the respondent submits that the amount involved in this case is below Rs 5,00,000/- and therefore, the appeal should be dismissed in view of Board Circulars No. F/390/Misc., 163/210 dtd 29.10.2010. He submits that there is no suppression of facts and the Commissioner (Appeals) had given detailed findings and proceeded on the correspondences. He reiterates the findings of the Commissioner (Appeals).

6. For the proper appreciation of the case, we reproduce below the findings of the Commissioner as under:

 I have carefully gone through the facts of the case and written submissions made by the appellants as well as the case laws cited by them and find that the appellants is a public limited company and manufacturing Sulphuric Acid, Oleum which are also transferred to their another/sister units on payment of central excise duty, that the value determined for the said clearance by the appellants under Rule 9 read with Rule 8 of central Excise Valuation Rules, 2000 ie., 110% of the cost of their production based on the cost of production of such goods, that the appellants has not revised the cost of production w.e.f 1.4.2004 on the basis of the expenditure incurred in the manufacture of such goods during the previous year 2003-04 as evident from their balance for 2003-04 for which the Deptt. has issued the SCN dated 31.5.06 on the basis of Balance Sheet of the appellants demanding the differential duty of Rs 3,71,511/-short paid by them on the goods so cleared to their sister/another units for the period from 1.4.2004 to 30.6.2004 by invoking proviso to Sec 11A(1) of the CEA, 1944 alongwith interest under Sec. 11 AB of the CEA, 1944 and also proposed penalty under Rule 25 of the CER, 2002 read with Sec 11AC of CEA, 1944. From the correspondence which appellants had with the Deptt it is observed that they have been regularly intimating the method and manner of valuation of the goods cleared to the sister/another units vide their letters dated 4.7.2002, 10.7.2002, 20.7.2002 and 8.9.2002.

In fact prior to the financial year 2004-05, the appellants have revised the cost of production of the goods cleared to another/other units based on cost of production of 1999-2000 w.e.f. 1.4.2000 but did not pay duty on the revised cost of production either w.e.f. 1.4.2000 or w.e.f. 1.7.2000 (the date on which Valuation Rules, 2000 came into force) but they started paying duty on revised cost w.e.f. 22.7.2000 only. Similarly for the year 2003-04, based on the balance sheet of 2002-03, although the revised cost of production is effective w.e.f. 1.4.2003 but they started paying duty based on revised cost of production w.e.f 1.7.2003 on the basis of Audited Balance Sheet received by them on 18.6.2003. Thus it is established beyond doubt that the appellants have bonafide belief, which is duly supported by the fact it was never objected by the Dept in the year 2000-01, 2003-04 that the duty is required to be paid on revised cost of production only after balance sheet is finalised not w.e.f 1st April. I thus hold that there is no suppression of facts by the appellants justifying invoking of extended time limit under proviso to Sec. 11A(1) of the Act.

Further there can not be any suppression when the facts are mentioned in balance sheet, which is public document as held by Honble Tribunal in cases mentioned by appellants in Para 7 above.

Further I also agree with the appellants that they had no intention to evade payment of duty as payment of differential duty by them was revenue neutral as they were entitled to credit of the same to another unit. Hence also extended period is not invokable. I therefore hold that the demand is time barred as proviso to Sec 11A(1) of the CEA., 1944 is not in this case.

7. We find that the appellants informed the Dept of the revision of the price time to time by various letters. Learned Authorised Representative for the Revenue drew the attention of the Bench to the findings of the Adjudicating Authority. It is observed that there is no consistency in the methods of valuation as claimed by the respondent. The Adjudicating Authority had elaborately discussed the inconsistency of the valuation methods. In our considered view, the inconsistency of the valuation methods cannot be treated as suppression of fact with intent to evade payment of duty. In other words, it is noticed that the appellant informed the Department time to time of variation of price and the Department was well aware of the method of price as declared by the respondent. Thus, there is no suppression of fact with the intent to evade payment of duty. We agree with the findings of the Commissioner (Appeals).

8. Learned Authorised Representative for the Revenue relied upon the decision of the Tribunal in the case of Tata Iron and Steel Company Ltd (Supra). In that case, the plea of Revenue neutrality raised by the assessee was rejected and the extended period was involved. In the present case, we find that the respondents had informed the Dept of their change of price time to time and the Departement had not disputed the costing of the products. Hence, the said case law would not apply in the present case. The decision of the Tribunal in the case of Steel Industries Kerala Ltd (supra) and Noble Detective and Security Service Pvt Ltd (Supra) as relied upon by the Learned Authorized Representative, it is held that the argument of the assessee of filing of balance sheet with Registrar of Companies, a document open to public, universal knowledge would not be attributed to the knowledge of the respondent. In the present case, we find that the respondent had declared their methods of valuation of the goods time to time in various letter and therefore the said case laws would not be applicable.

9. In view of the above discussions, we do not find any reason to interfere order of the Commissioner (Appeals). Accordingly, the appeal filed by Revenue is rejected.

(Dictated and pronounced in the Court)

(H.K. Thakur) (P.K. Das) Member (Technical) Member (Judicial)

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