) M/S. Hind Auto Pvt.Ltd vs Commissioner Of Central Excise & ...

1-6) Appeal Nos.EA-241, 244-246/10 & E-694/2010

(Arising out of the order in Appeal No. 16-20/JSR/2010 dated 11.02.2010 passed by the Commissioner(Appeals) of Central Excise & Service Tax, Ranchi)

FOR APPROVAL AND SIGNATURES OF

DR. D.M.MISRA, HONBLE JUDICIAL MEMBER SHRI H.K.THAKUR, HONBLE TECHNICAL MEMBER

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?

1) M/s. Hind Auto Pvt.Ltd., 2) M/s. JMT Auto 3) M/s. JMT Auto (Unit-ii) 4) M/s. Precision Automotives Co. P. Ltd 5) M/s. Sokhi Engineering Co. (p) Ltd.

APPLICANT(S) VERSUS Commissioner of Central Excise & Service Tax, Ranchi ...RESPONDENT (S)

APPEARANCE:

SHRI A.SRIVASTAVA, ADVOCATE FOR THE APPELLANT SHRI K.CHOUDHURY, SUPDT.(AR) for the Respondent

CORAM:

DR. D.M.MISRA, HONBLE JUDICIAL MEMBER SHRI H.K.THAKUR, HONBLE TECHNICAL MEMBER

Date of Hearing: 28.09.2015 Date of Decision: 28.09.2015

ORDER NO.FO/A/75566-70/15

Per Shri H.K.Thakur

These appeals have been filed by the appellants against the orders passed by Commissioner (Appeals) Central Excise & Service Tax, Ranchi.

2.Sh. A.K. Shrivastava (Advocate) appearing on behalf of the appellants argued that all the appellants are vendors of M/s. Tata Motors who manufacture various autoparts on the basis of drawings, designs & specifications supplied by M/s Tata Motors. That Since the appellants are not charging any amount on account of Drawing & designs cost ( D&D Cost), therefore the same are not required to be included in the cost of parts manufactured by the appellants. That both the appellants & M/s Tata motors were approached by the Revenue to provide the demand of D&D cost. That even M/s Tata could not Motors express any opinion on the issue but agreed to provide D&D cost as a percentage of total expenditure of Jamshedpur plant. That as per this calculation given by M/s Tata Motars the D&D cost element worked out to 0.085% of the total cost of Jamshedpur plant and that D&D cost for each component manufacturing vendor can be taken as 0.085%. of the component cost. Learned Advocate of the appellants argued that such D&D Cost element can not be added in perpetuity & has to end at some point of time. He relied upon the following case laws:-

(i) Commissioner of Cetral Excise & Customs. Pune Vs. Bharat Forge Ltd [2000(122) E.L.T.169 (Tribunal)

(ii) Eastman Crusher Company (p) Ltd.

Vs. Commissioner of Central Excise, Haldia.

[2008(224) E.L.T. 86 (Tri.-Kolkata).

(iii) Ashok Iron Works Ltd. Vs. Commissioner of Central Excise, Belgaum. [2004(168) E.L.T. 198 (Tri.-Bang.)

3.Sh.K.Choudhari, Supdt.(AR) appearing on behalf of the Revenue argued that on merit of adding 0.085% has already been decided by the bench in the case of appellants as per order No. A-1263-1347/KOL/08 dt 16/12/08 and only the case was remanded to the Adjudicating authority for the purpose of calculating duty liability within one year normal period.

4. Heard both sides & perused the case records. It is observed from the case records that this bench under order No. 1263-1347/KOL/08 dt 16/12/08 decided 85 appeals & 29 cross objections on the same issue of the other appellants in the order dt 16/12/08 some of the appellants in order dt 16/12/2008 filed ROM applications this bench as per case law JMT Ltd us CCE Jamshedpur. [2009 (247) ELT 802 (In Kolkata)] dismissed the same.

4.1 It is further observed that this bench while passing final orders dt 16/12/08 made following observations while holding that 0.085% of cost of component has to be added while arriving of the assessable value of the components manufactured by appellants:-

 After careful consideration of the case records as well as the submissions from both sides, we note that the cited decision of the Tribunal though under the earlier provision of law, did hold that the cost of drawings is not includible in the assessable value. Moreover, investigation has not brought out any evidence that a large number of vendors, who are the manufacturers, and who are responsible for paying the duty on the components manufactured by them, had knowledge that some expenditure was made in respect of designs and drawings or to what extent such expenditure was attributable towards each component manufactured by them. It is pertinent to note that though such a large number of ver dors were manufacturing and supplying the components to M/s. Tata motors over a long period and in respect of which M/s. Tata motors have been taking credit of input duty, the Departmental Authorities themselves had not raised the issue at any point of time earlier that the value of drawings and designs should be included in the assessable value of the components. This has also not been done after introduction of the new Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000 specifically providing for addition to be made to the value towards drawing, designs etc supplied free.

As such, we are of the considered view that the escapement of the additional duty for the impugned period was not no account of suppression, misstatement etc, but on account of a mistake of law on the part of the assessees as well as the Departmental Authorities. Hence, while holding that the cost of drawings and designs 0.085%, as provided by M/s. Tata Motors, is includible in the assessable value of the components, we hold that the demand for the same can only be sustained for the normal period of limitation. In view of the fact that the show cause notices have been issued on various dated, the matter requires to be sent back to the Original Authority to calculate the additional duty amount for the normal period in each case. Since we have held that there is no suppression, misstatement etc, the additional duty to be paid by the Respondent Vendors would also be admissible for taking credit by M/s. Tata Motors to whom the components have been supplied. As we have ordered confirmation of the demands for the normal period holding that the escapement of duty has arisen on account of ignorance of law on the part of the Assessees as well as the Departmental Authorities alike, there is also no justification for imposition of penalties on any of the Respondents.

The interest on duty applicable for the normal period of demand would however, be payable in accordance with law.

1.2 In view of the foregoing, we set aside both the impugned orders-in-Appeal and remand the matter to the Original Authority for re-determining the additional duty and interest, if payable in accordance with law, for the normal period of limitation. All the penalties imposed under the Original Orders are set aside. M/s . Tata Motors shall be eligible to take credit of the additional duty paid by the Respondent Vendors as and when quantified and paid. The Original Authority, while passing fresh orders, shall give a reasonable opportunity of hearing to the Respondents. 

4.2. As a result of above remand adjudicating authority has only confirmed demands & interest pertaining to the normal period of limitation, which has also been upheld by the first appellate authority under OIA dt 11/12/2010. No appeal against our order dt 16/12/08 has been filed by the appellants. As lower authorities have only carried out the directions contained in out order dt 16/12/08, therefore, we do not find any irregularity in passing the impugned orders.

5. in view of the above observations appeals filed by the appellants are dismissed.

(Operative part of the order was pronounced in the open Court.)

(D.M.MISRA) (H.K. THAKUR) JUDICIAL MEMBER TECHNICAL MEMBER

Tushar kumar