M/S Purify Filters vs Cce, New Delhi

[Arising out of the Order-in-Appeal No. 63/CE/APPL/DLH-IV/ 2006 dated 19/09/2006 passed by The Commissioner of Central Excise (Appeals), New Delhi.]

For Approval and signature :

Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

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 would 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 :

Department Authorities?

M/s Purify Filters Appellant

Versus

CCE, New Delhi Respondent

Appearance

Shri J.M. Sharma, Advocate  for the appellant.

Shri Ranjan Khanna, Authorized Representative (DR)  for the Respondent.

CORAM: Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

Final Order No. 52244/2015 Dated : 14/07/2015

Per. B. Ravichandran :-

The appellants are manufacturers of oil filters falling under Central Excise Tariff Heading 8421.00 of the Central Excise Tariff Act. In August 1998, the Central Excise officers conducted certain verifications in the factory premises of the appellant. On completion of the investigation, the show cause notice dated 2/2/99 was issued. The notice demanded Central Excise duty of Rs. 5,21,360/- in terms of Section 11A and 11D of the Central Excise Act, 1944. Notice also proposed confiscation of goods valued Rs. 1,50,840/- and a tempo van valued at Rs. 2,50,000/- apart from penalties. The issue involved is that the appellant has been paying Central Excise duty with concessional rate and whereas collected the full rate of excise duty from their buyers resulting in collection of excess amount towards excise duty and retaining the same without depositing to the Government. Goods worth Rs. 1,50,840/- alongwith their tempo was sought to be confiscated on the ground that the details of clearances were not entered in the RG-1 and the covering invoices did not contain all details like value, duty etc. The case was adjudicated by the Original Authority vide order-in-original dated 09/3/2001 the demand was confirmed. The confiscation of seized goods and tempo were ordered with a redemption fines and penalty of Rs. 50,000/- was imposed on the appellant. A separate penalty was also imposed on the partner. On appeal, the learned Commissioner (Appeals) vide order dated 14/2/2002 upheld the said order-in-original except for the confiscation of the tempo and penalty on the partner. On further appeal by the appellant to the Tribunal vide final order No. 480/02-A dated 27/09/2002 remanded the matter to the Original Authority for denovo consideration. The Tribunal ordered the appellant cannot be subjected to the recovery of duty under the provisions of Section 11A. More appropriate provision will be Section 11D. The Original Authority decided the case again vide order-in-original dated 26/8/2005. He confirmed the liability of the appellant to the full demanded amount under Section 11D. He also held the seized goods in the tempo liable for confiscation and imposed redemption fines and penalty of Rs. 50,000/-.

2. On further appeal the Commissioner (Appeals) vide his order dated 19/09/2006 upheld the order-in-original except for confiscation of tempo.

3. The appellant is before us against the said Commissioner (Appeals) order. The learned Counsel for the appellant contested the applicability of Section 11D to their case. He pleaded that Section 11D will be applicable only when any amount is collected by the appellant representing Central Excise duty and not paying the same to the Government. It is not established by the Department that they have represented and collected any excise duty in excess of amount paid to the Government, from their buyers. They have paid applicable duty and collected the same from their buyers. The agreement for supplying oil filters is on cum-duty basis. Regarding confiscated of goods loaded in the tempo inside the factory, the learned Counsel pleaded that the goods have not left the factory and before completion of formalities the seizure of the goods and tempo with the presumption that duty is not discharged or accounts are not properly maintained is not correct.

4. Learned AR relied on the findings by lower Authorities. He specifically drew our attention to contracted prices indicated in the purchase orders by the buyers for the year 1995-1996 and 1996-1997. The contracted prices for oil filters was Rs. 42/- per piece + the Central Excise duty at full rate i.e. 10%. Similarly, for the year 1997-1998 and 1998-1999 the contracted price for oil filters was Rs. 44.50 + Central Excise duty at full rate i.e. 13%. During the relevant period, the appellant paid duty at concessional rate, but charged the buyer the contracted price + full rate of Central Excise duty. The learned AR also relied on the fact that the appellant entered two different details into two sets of same invoices i.e. the original and duplicate copies showing value with full rate of excise duty the triplicate and quatriplicate showing higher assessable value with concessional excise duty while matching the contract value full price, the appellant collected extra amount in the name of duty and benefited.

5. Heard both the sides and examined the appeal records. The main point for decision is whether or not the appellant collected in the name of excise duty any amount from their buyers which they failed to deposit to the Government. The plea of the appellant is that in all inclusive price purchase order they have only charged concessional rate of excise duty which they have deposited with the Government. However, the facts of the case as revealed from the records indicate that the rate mentioned in the purchase order is per piece price + Central Excise duty of 10% or 13%. It is apparent that maintenance of two sets of same invoice as explained by learned AR and admitted by the appellant is a clear indication of method followed by the appellant for collecting extra amount in the name of Central Excise duty form their buyers. In this regard reliance can be placed on the facts corroborated by the Chief Manager of Escorts Ltd. (buyers) in his statement dated 28/8/1998. He categorically stated that they were paying unit rate + Central Excise duty @ 13%. The preparation of invoices in two sets with different details of assessable value and Central Excise duty for the same clearance was admitted by Shri D.K.

Mattoo, Partner of the appellant firm. These details were elaborated in the impugned order-in-appeal also. The appellants plea that preparation of different sets of original duplicate and triplicate or quatriplicate is only a procedural lapse is not at all tenable. The single clearance document having different factual details in original and triplicate cannot be considered as procedural lapse. The idea behind such act is to represent the price and Central Excise duty differently to the buyer. This is further corroborated by the fact that the appellant were also supplying oil filters to M/s Escorts Ltd. (CTD Division, Faridabad) who were availing Modvat credit and in that case, the appellant raise invoices in one set only giving all particulars correctly. This fact has been admitted by the partner also. The learned Counsel for the appellant has insisted that Section 11D apply only when they represent certain amount as Central Excise duty and collected the same from the buyer and not deposited the same to the Government. The facts as narrated above clearly establish that the appellant did collect amounts representing Central Excise duty and retained the same.

As such we find that the same is to be paid to the credit of the Central Government in terms of Section 11D of the Central Excise Act, 1944. It is apparent that the appellant made documentation deliberately to this end and as such are liable for penalty under Rule 173Q.

6. Regarding confiscation of the goods loaded into tempo, we find the same was in the factory premises and the confiscation was apparently ordered on the grounds of incomplete particulars in the records and discrepancy between the copies of invoice. We find since the goods are still in the factory premises and the documentation were required to be completed at the time of clearances, there is no sufficient cause to order the confiscation of said goods. Accordingly, we set aside that portion of impugned order regarding confiscation of goods.

7. In view of the above discussion, the appeal is disposed of in the above terms.

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

(Ashok Jindal)

Member (Judicial)

(B. Ravichandran)

Member (Technical)

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