M/S.Godrej Consumer Products Ltd vs Cce &St, Indore

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI

Date of Hearing/decision:09.02.2015

Excise Stay Application No.54681 of 2014 in

Appeal No.E/54128 of 2014-EX(DB)

[Arising out of Order-in-Original No.61/COMMR/IND/CEX/2014 dated 3.7.2014 passed by the Commissioner of Customs, Central Excise & Service Tax, Indore ]

M/s.Godrej Consumer Products Ltd. Appellant

Vs.

CCE &ST, Indore Respondent

For approval and signature:

Honble Shri Rakesh Kumar, Member (Technical)

Honble Shri S.K. Mohanty, Member (Judicial)

1 Whether Press Reporters may be allowed to see 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 of the Order?

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

Appearance: Rep.by Shri Amit Jain, Advocate for the appellant.

Rep. by Shri Pramod Kumar, DR for the respondent.

Coram: Honble Shri Rakesh Kumar, Member (Technical)

Honble Shri S.K. Mohanty, Member (Judicial).

Final Order No.50797/2015 /dated: 9.2.2015

Per Rakesh Kumar:

The appellant in their Unit at Indore manufacture detergent soaps and detergent noodles. They have a another unit at Baddi, Himachal Pradesh, which is availing of duty exemption under notification no.50/03-CE dated 10.06.2003. During 2011-2012, they cleared soap noodles to their Baddi Unit on payment of duty on the value determined under Rule 8 of the Central Excise Valuation Rules, 2000 i.e.on the basis of 110% of the cost of production. For determining the cost of production , the practice adopted by the appellant is that they determined the cost in terms of CAS-4 format on monthly basis. In other words, for payment of duty on the goods cleared during a month to Baddi Unit, they adopted the cost for the previous month. At the end of the year, they were also getting the cost of the production determined for the entire financial year through a Cost Accountant and on the basis of the assessable value based on the cost of production, if there was short payment, the same was being made good. In this case, the Department determined the assessable value on the basis of annual cost of production based on CAS-4 format and compared the same with the assessable value adopted for each month and in whichever month, lesser value had been adopted resulting in lesser payment of duty, differential duty has been demanded. It is on this basis that that the Commissioner by the impugned order dated 7.7.2014 has confirmed the duty demand of Rs.3,18,51,841/- against the appellant along with interest and has imposed equal amount of penalty on them under Section 11 AC. Against this order of the Commissioner (Appeals), this appeal has been filed along with stay application.

2. Though the matter was listed only for hearing of the stay application , after hearing this matter for sometime, the Bench was of the view that the matter can be taken up for final disposal. Accordingly, the requirement of pre-deposit is waived and with the consent of both the sides, the matter is heard for final disposal.

3. Shri Amit Jain, Advocate, ld. Counsel for the appellant, pleaded that though the appellant during each month were discharging duty liability on the assessable value determined on the basis of cost of production for the previous month, at the end of the year, the appellant were also getting cost of production determined for the entire financial year as per CAS-4 format, that on the basis of this cost of production, if there was short payment of duty during the year the same was being made good, after adjusting the short payment during certain months against excess payment of duty, if any, during other months, that though in course of hearing before the Commissioner the appellant had pleaded that the differential duty has already been paid, no finding has been given, that in any case, the duty demand for the period 2011-2012 raised by the show cause notice dated 8.11.2013 is time barred inasmuch as the Department had issued a show cause notice dated 21.11.2011 on the same ground for the period from 2007-2008 to 2011 to 2012 by invoking extended period and hence, for the subsequent period, the Department could not invoke the extended period just because there was delay in furnishing of the information on the part of the appellant and in view of this, the impugned order is not sustainable.

4. Shri Pramod Kumar, ld. Departmental Representative, defended the impugned order by reiterating the findings of the Commissioner (Appeals). However, he stated that he has no objection if this matter is remanded to the Commissioner for de novo adjudication.

5. We have considered the submissions from both the sides and perused the records.

6. The duty demand is in respect of the clearance made by the appellant to the manufacturing unit at Baddi, in respect of which the assessable value is required to be determined under Rule 8 of the Central Excise Valuation Rules, 2000 i.e. 110% of the cost of production. The appellant had adopted the practice of determining the assessable value in respect of the goods cleared to Baddi Unit during a month on the basis of the cost of production for the previous month. Besides this, the appellant were also determining the cost of production for the entire financial year in CAS-4 format and if the assessable value determined on the basis of this cost of production was more than the assessable value adopted during certain months resulting in lesser payment of duty, they were paying the differential duty after adjusting the extra payment of duty, if any, during the other months. It is contention of the appellant that if the payment of duty made by the appellant on their own is taken into account, there would be no duty demand. On going through the order, we find that this plea of the appellant has not been considered. It is seen that in respect of the appeal no.E/58715/2013 filed by the appellant against the earlier order-in-original dated 26.03.2013 passed by the Commissioner, wherein an identical issue was involved, the Tribunal vide Final Order dated 7.7.2014 had remanded the matter for de novo decision with the observation that,  as is clear from the above, the appellant have taken specific plea that they were preparing annual CAS-4 certificate and were paying the duty on shortfall, if any, after adjusting the excess duty paid by them in some of the months. There is no finding on the above plea of the appellant. If the appellant have actually paid the differential amount of duty, the same would lead to a situation where no duty liability would arise against the assessee. In view of this, this matter has also to be remanded to the Commissioner with the same directions.

7. Besides this, in this case, we also find that while the period of dispute is 2011-2012, the show cause notice has been issued only on 8.11.2013, i.e. beyond the period of normal limitation period, while the appellants plea is that the allegation of suppression of relevant facts could not be made, as on the basis of the same facts, earlier, a show cause notice for the period 2007-2008 and 2010-2011 has been issued and there were bona fide reasons for delay in furnishing the required information. The Appellant also cited the judgement of the Apex Court in the cases of Nizam Sugar Factory Vs. CCE reported in 2006 (197) ELT 465 (SC), ECE Industries Ltd. Vs. CCE reported in 2004 (164) ELT 236, Pushpam Pharmaceuticals Company Vs. CCE reported in 1995 (78) ELT 401 (SC) in support of their plea that the duty demand is time barred. The Commissioner, without considering these judgements, specially the judgement in the case of Nizam Sugar Factory (supra), has held that extended period of limitation under proviso to Section 11A(1) would be applicable.

8. In view of the above discussion, the impugned order is set aside and the matter is remanded to Commissioner for de novo adjudication. In de novo proceedings, the Commissioner must consider the appellants pleas of -

(a) the differential duty having been paid by them after adjusting the excess payment in some months; and

(b) whether extended limitation period under proviso to Section 11 A(1) is invokable in view of the Apex Courts judgements mentioned above.

( Rakesh Kumar )

Member (Technical)

( S.K. Mohanty )

Member (Judicial)

Ckp.

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