M/S Mahavir Castings Pvt.Ltd vs Commissioner, Central Excise & Service ...
- CitationAppeal No.E/3975,3976/2005-DB
Ratio decidendi
The rule this decision rests on
The reasoning in this order rests on the following principles, in the order the Tribunal takes them: Where a manufacturer's recovery from customers of pattern charges (amortisation of the cost of patterns not made by the manufacturer itself) is shown to be consideration for the goods, the proportionate cost of the pattern forms part of the assessable value of the castings under the Central Excise valuation scheme, and its exclusion from the assessable value makes the duty recoverable on that amount, even where the show cause notice framed the case as one of clandestine clearance, since the authorities' findings rest on the assessee's own submissions made before the adjudicating authority. Duty not paid on amortisation charges is recoverable in the amount of the duty leviable on them, and an objection that the duty has not been quantified cannot be sustained at the appellate stage where the assessee has not itself quantified the amount before the lower authorities or the Tribunal. Penalty under Section 11AC of the Central Excise Act, 1944 may be avoided, on the assessee's payment of 25% of the duty within the stipulated period, only where the adjudicating authority has not given that option; and a penalty cannot be imposed on a director of a company absent any material on record showing his personal liability for the contravention.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Appeal No.E/3975,3976/2005-DB [Arising out of OIA No.302 to 303/2005, dt.28.09.2005, passed by Commissioner (Appeals), Central Excise & Service Tax, Ahmedabad]
1. M/s Mahavir Castings Pvt.Ltd., 2. Shri Ronak S. Shah Appellants
Vs
Commissioner, Central Excise & Service Tax, Ahmedabad-I Respondent
Represented by:
For Appellant: Shri Nirav Shah, Advocate For Respondent: Shri Alok Srivastava, Dy.Commr. (Authorised Representative)
For approval and signature: Honble Mr. P.K. Das, Member (Judicial) Honble Mr. H.K. Thakur, Member (Technical)
1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM: HONBLE MR. P.K. DAS, MEMBER (JUDICIAL) HONBLE MR. H.K. THAKUR, MEMBER (TECHNICAL)
Date of Hearing/Decision:19.03.2015
Order No. A/10254-10255/2015, dt.19.03.2015
Per: P.K. Das
These appeals are arising out of a common order and therefore, both are taken up together for disposal.
2. The Appellants were engaged in the manufacture of Iron Casting, S.G. Iron & Steel Casting and Alloy Steel Castings, classifiable under sub-heading No.7325.10 of the Schedule to the Central Excise Tariff Act, 1985. On 28.09.2002, the Central Excise officers visited the Appellants factory and found that they have issued debit note for pattern charges to their various customers and recovered the amount from them which was not included in the assessable value. A Show Cause Notice dt.12.08.2004 was issued, proposing demand of duty of Rs.95,054.00 along with interest and to impose penalties on the Appellants. The Adjudicating authority confirmed the demand of duty of Rs.95,054.00 alongwith interest and imposed penalty of equal amount on the Appellant Company and also imposed a penalty of equal amount of duty on the Director of the Appellant Company (Appellant No.2 herein). The Commissioner (Appeals) upheld the Adjudication order.
3. The main grievance of the learned Advocate is that the impugned order was passed beyond the scope of the Show Cause Notice. He submits that it has been alleged in the Show Cause Notice that they have cleared the goods clandestinely. But, both the authorities below observed that the value of pattern charge would be includable in the assessable value as amortization charges which is not charged in the show cause notice. He further submits that in any event, the demand of duty on account of amortisation charges is excessive without considering the actual amount of duty.
4. We are not impressed with the submissions of the learned Advocate. On perusal of the impugned order, we find that the Appellant contended before the Adjudicating authority that they do not make moulds or dyes. Such patterns are manufactured by third parties like M/s Laxmi Pattern Works, M/s Maitri Enterprise etc. It is contended before the lower authorities that they issue debit notes to their customers. The Adjudicating authority following the CBEC Circular No.170/4/96-CE, dt.23.01.1996, held that proportionate cost of pattern has to be included in the assessable value of the casting. It appears that this fact was not disclosed by the Appellant before the visiting officers. Therefore, the findings of the Adjudicating authority are on the basis of submissions of the Appellant.
5. We find that the Appellants have not paid the duty on the Amortisation cost. They have also not quantified the amount before the lower authorities and even before the Tribunal. The contention of the learned Advocate that the duty was not properly quantified cannot be accepted, at this stage. However, we agree with the submission of the learned Advocate that penalty should not be imposed on the Director of the Appellant Company. We do not find any material available on record for imposition of penalty on the Director of the Appellant Company. We have also considered that the Adjudicating authority has not given the option to pay penalty 25% of the duty within specified period imposed under Section 11AC of Central Excise Act, 1944.
6. In view of above discussion, we reject the appeal filed by the Appellant No.1 subject to the Appellant would pay the penalty equal to 25% of the duty within 30 days alongwith duty and interest from the receipt of this order, failing which they have to pay the entire amount of penalty. The appeal filed by the Appellant No.2 is allowed.
(Dictated & Pronounced in Court)
(H.K. Thakur) (P.K. Das) Member (Technical) Member (Judicial)
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