M/S. Santech Motors Pvt.Ltd vs Commissioner Of Central Excise & ...

Stay Petition No.SP-71187/13 & Appeal No.Ex.Ap.71134/13 (Arising out of Order-in-Original No.11/Commr/2013 dated 30.04.2013 passed by the Commissioner of Central Excise & Service Tax, Jamshedpur.)

FOR APPROVAL AND SIGNATURE

HONBLE DR. D.M. MISRA, MEMBER(JUDICIAL) HONBLE DR. I.P. LAL, 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 should be released under Rule 27 of the CESTAT(Procedure) Rules, 1982 for publication in any Authorative report or not?

3. Whether Their Lordship wishes to see the fair copy of the Order?

4. Whether Order is to be circulated to the Departmental Authorities?

M/s. Santech Motors Pvt.Ltd. Applicant (s)/Appellant (s) Vs.

Commissioner of Central Excise & Service Tax, Jamshedpur Respondent (s)

Appearance:

Dr.S.Chakraborty & Shri Abhijit Biswas, Adv.s for the Appellant (s) Shri S.Sharma, Commr.(A.R.) for the Respondent (s)

CORAM:

Honble Dr. D.M. Misra, Member(Judicial) Honble Dr. I.P. Lal, Member(Technical)

Date of Hearing:- 11.06.2015 Date of Pronouncement :- 11.06.2015

ORDER NO.FO/A/75299/2015

Per Dr. D.M. Misra.

1. This is an application seeking waiver of pre-deposit of duty of Rs.3.84 Crores and penalty of equal amount imposed under section 11AC of Central Excise Act, 1944.

2. At the outset, Dr.S.Chakraborty, ld. Sr.Adv. for the applicant has submitted that the demand has been confirmed against them alleging under-valuation of finished excisable goods, namely, 14-Cu.M of Tipper body & 16-Cu.M of Tipper Body faling under chapter sub-heading 8704, 8707 & 8708 of CETA, 1985. Briefly explaining the activities carried out by the applicant, the ld.Adv. submitted that the applicant are manufacturer of the said finished goods as body builders for M/s.Hyva Motors and others. He has submitted that during the period May, 2007 to March, 1011 they have received purchase orders for supply of 14-cum tipper body and 16-cum tipper body from the clients and after manufacturing/fabricating the tipper body, the same were supplied on the basis of transaction value between the applicant and their clients. Besides, they are also engaged in providing Job-work of various parts received by them from their clients under Rule 4(5)(a) of the CENVAT Credit Rules,2004.

3. The allegation of the department is that the inputs which they had received against job-work challan under Rule 4(5)(a) of CENVAT Credit Rules, 2004 were fitted with the Tipper body and cleared without being returned after its process to the principal manufacturer i.e. M/s.Hyva Motors and others, resulting into non-inclusion of its value being free issue materials in the transaction value of the tipper body.

4. The ld. Sr.Adv. submitted that in their reply to the show cause notice, the applicant had explained in detail work order-wise, the inputs/semi-finished goods received under 4(5)(a) and later after processing, returned to the principal manufacturer. It is his grievance that the evidences laid down before the ld.Commissioner were not considered and the order was passed on the basis of an erroneous presumption that the applicant had received the inputs/semi-finished goods under 4(5)(a) and not returned to the principal manufacturer after processing, but cleared along with the finished goods i.e. the tipper body without including its value in the transaction value of tipper body. The ld.sr.Adv. drew our attention to the evidences, viz., (i) Annexure-II job-work challan (enclosed at page 512 of the volume-III of paper book) wherein after processing the inputs/semi finished goods by the Applicant it was endorsed that the processed goods were returned to M/s.Hyva; (ii) the payments towards the job charges against the said challan (page 512-527) and (iii) the relevant work order for job-work(page 514). He submits that even though the ld. Commissioner has referred to the work orders but erroneously concluded that the inputs/semifinished goods were not returned after processing under Rule 4(5)(a), without considering these evidences of relating to receipt, processing,return, payments, etc. for which the records have been meticulously maintained. He submits that they can demonstrate before the Commissioner that every item received under 4(5)(a) of CENVAT Credit Rules, after processing were returned and not used in the tipper body as alleged by the department. He prays that the matter may be remanded to the ld.Commissioner for re-consideration of all evidences. He submits that the appellant is facing severe financial crisis as the orders from M/s Hyva Motors are drastically reduced and in the previous financial year, marginal profit of one lakh has been recorded. He makes an offer to deposit Rs.10.00 Lakhs at this stage.

3. Per contra, the ld.AR for the Revenue on the other hand submits that in their initial response to the audit objection, the applicant had themselves mentioned that they are clearing the goods received for job-work after processing it along with the finished tipper body. He submits that the applicant failed to demonstrate sufficiently before the ld. Commissioner about the return of the semi-finished goods received under Rule 4(5)(a) of CENVAT Credit Rules, 2004. However, he fairly accepts that all evidences laid down by the applicant have not been considered/analyzed by the ld.Commissioner while passing the order. He has no objection in remanding the case to the ld.Commissioner for re-consideration of all the evidences referred to by the ld.Adv. and also other evidences that would be produced during the hearing.

4. After hearing both sides for some time, we find that the appeal itself could be disposed of at this stage. Accordingly, with consent of both sides the appeal itself is taken up for disposal.

5. We find that the dispute relates to inclusion of value of inputs/semi finished goods received by the appellant alleged to have been fitted into the finished goods, namely, tipper body. The contention of the appellant is that besides receiving the inputs/semi finished goods for processing under Rule 4(5)(a), they also undertook manufacture of tipper body and supply the same to M/s.Hyva Motors & others on payment of duty against the transaction value. The Appellant have vehemently argued that the inputs/semi finished goods received under Rule 4(5)(a) of CENVAT Credit Rules were returned after processing to M/s.Hyva Motos Ltd.. Prima facie, the appellant could able to demonstrate before us that they have been receiving inputs and returning after completion of the processes on such inputs to the principal manufacturer i.e. M/s.Hyva India Ltd. & others. Whereas, the Commissioner has recorded a categorical finding that the inputs/semi finished goods received under rule 4(5)(a) had not been returned separately, but after being fitted with the finished goods, were ultimately cleared to the principal manufacturer. However, we find that the ld.Commissioner has not recorded the detail evidences on the basis of which such a conclusion has been arrived at nor he has analyzed/discussed the evidences placed before him by the appellant in support of their claim. In these circumstances, we are of the opinion that in the interest of justice the matter needs to be remanded to the ld. Commissioner for deciding the issue afresh after analyzing the evidences on record and the evidences that would be produced by the appellant during the course of hearing. At this stage, the offer to deposit Rs.10.00 Lakhs(Ten Lakhs) seems to be reasonable. Consequently, the appellant is directed to deposit Rs.10.00 Lakhs within a period of eight weeks from the date of communication of the order and report compliance directly to the ld.Commissioner. The ld.Commissioner after recording compliance would proceed with the matter afresh. It is made clear that all issues are kept open. Both sides are at liberty to adduce evidences in their favour. Needless to mention a reasonable opportunity of hearing be granted to the appellant. Appeal allowed by way of remand. Stay Petition disposed of.

(Pronounced and dictated in the open court.)

SD/ SD/

(I.P.LAL) (D.M.MISRA) MEMBER(TECHNICAL) MEMBER(JUDICIAL) sm

6 Appeal No. Ex.Ap.71134/13