M/S. Model Heavey Fabrication Pvt, Ltd vs Commissioner Of Central Excise & ...

Stay Petition No. SP-867/2010 & Appeal No. E/695/2010

(Arising out of the order in Appeal No. C. No. XAP-65/JSR/2010 dated 16.09.2010 passed by the Commissioner of Central Excise & Service Tax, Division-III, Jamshedpur

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?

M/s. Model Heavey Fabrication Pvt, Ltd

APPLICANT(S) VERSUS

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

APPEARANCE:

SHRI A. K. Srivastava, (Advocate) FOR THE Appellants SHRI M. sing (AR) FOR THE Respondents

CORAM:

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

Date of Hearing: 14.09.15 Date of Decision: 14.09.15

ORDER No. FO/A/75624/15

Per Shri H.K.Thakur

This appeal has been filed by the appellant against OIA No. 77/JSR/2010 dt 16/09/2010 passed by Commissioner (Appeals) Central Excise & Service Tax, Ranchi as first appellate authority. Under this OIA first appellate authority has upheld OIO No. 100-MP/OFFENCE/2010 dt 18/3/2010 confirming a demand of Rs. 29,649.98, alongwith interest, against the appellant. An equivalent amount of penalty has also been imposed upon the appellant under Rule 25 of the Central Excise Rules 2002, reed with Sec 11 AC of the Central Excise Act 1944.

2 Both sides agree that the issue involved in this appeal is also regarding addition of 0.085% of cost of component manufactured by the appellant on job work basis for M/s. Telco construction Equipment Co. Ltd, Jamshedpur. That this bench has heard same issue of other similarly placed job works / vendors and decided the appeals. That the demand in the present case is within the normal period of limitation.

3 Heard both sides & perused the case records. It is observed that the same issue has been decided by us under order No. FO/A/75566-75570/2015 dt 28/09/15 by passing the following order:-

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 & cross objections on the same issue of the other appellants in the order dt 16/12/08. Some of the appellants in order dt 16/12/08 filed FOM 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, has 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 the though such a large number of vendors 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 assesses as well 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 Origtinal Orders are set aside. M/s. Tata Motors shall be eligible to take credit of the additional duty paid by the Respondent Venders as and when quantified and paid. The Original Authority, while passing fresh orders, shall gove 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 our order dt 16/12/08, therefore, we do not find any irregularity in passing the impugned orders.

3. In view of the above after allowing stay application appeal filed by the appellant itself is taken up for disposal. Appeal filed by the appellant is allowed only to the extent of imposition of penalty in view of our earlier order dt 28/09/15 Stay petition filed by the appellant also disposal of.

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

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

Tushar kumar

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