Pvt. Ltd vs Cce-Raipur

[Arising out of Order-in-original no. COMMISSIONER/RPR/CEX/22/2014 Dated 31/3/2014 passed by the Commissioner, Customs & Central Excise, Raipur]

1. Whether Press Reporter 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. Pratibha Flowcon Engineering

Pvt. Ltd. Appellant

Vs.

CCE-Raipur Respondent

Appearance: Ms. Reena Khair, Advocate for the appellant

Sh. R.K. Grover, DR for the Respondent.

Coram: Honble Sh. Rakesh Kumar, Member (Technical)

Honble Sh. S.K. Mohanty, Member (Judicial)

Final Order No. 51119/2015

Per: Rakesh Kumar

The facts leading to filing of this appeal along with stay application are, in brief, as under:

1.1 The appellant are manufacturers of various machinery and parts of machinery e.g. bunkers, pushers/ pilers, inner and outer carrying rings, gas duct, stack, manholes for blast furnace complex, etc, falling under Chapter 84 of the Central Excise Tariff. They were manufacturing these machinery/machinery parts for their various customers, namely, M/s. Siemens VAI Metals Technologies Pvt. Ltd., M/s. SMS India Pvt. Ltd. and M/s. Danieli India Ltd out of the drawings and designs supplied by them. The period of dispute is from 2007-2008 to 2011-2012 and the point of dispute is as to whether or not value of the drawings and designs supplied by the Customers of the appellant are to be included in the assessable value of the goods manufactured by the appellant. The department was of the view that the value of the drawings and designs supplied by the appellants customers on the basis of which the machinery parts/machinery had been manufactured, would be includible in the assessable value of the goods. It is on this basis that the Commissioner vide order-in-original dated 31/3/2014 confirm the duty demand of Rs. 51,08,547/- against the appellant along with interest thereon under section 11AB/AA of Central Excise Act, 1944 and imposed penalty of equal amount on them under section 11AC.

1.2 Against this order of the Commissioner, this appeal has been filed along with stay application.

2. Though the matter is listed today for hearing of the stay application, after hearing the matter for sometime, the Bench was of the view that the appeal itself can be taken for final disposal. Accordingly, the requirement of pre-deposit is waived with the consent of both the sides the matter is heard for final disposal.

3. Ms. Reena Khair, Advocate, the ld. Counsel for the appellant, pleaded that the order is an ex-parte order passed without hearing the appellant, that the appellant have not been extended the mandatory three opportunities of personal hearing; that the department vide letter dated 6/2/2014, while supplying the relied upon documents, had fixed the hearing of the matter on 26/2/2014, that since on 26/2/2014, the appellant could not attend the hearing, the department vide letter dated 28/2/2014 fixed the hearing of the matter on 12/3/2014 but on the same day, i.e., 28/2/2014 another letter was issued by which the hearing fixed on 12/3/2014 was adjourned to 20/3/2014: that the appellant sought the adjournment of hearing to April, 2014 as their Director was under medical treatment but the Commissioner without granting any further opportunity for hearing, decided the matter ex-parte by treating the date 12/3/2014 as the date of hearing, while the hearing on 12/3/2014 had been adjourned to 20/3/2014; that the impugned order is not correct even on the merits as the cost of drawings and designs has been adopted as 10% of the sale price of the goods, that in terms of the provisions of Rule 6 of the Central Excise Valuation Rules, it is only the value of drawings used in the production of the goods or the value of engineering, development, art work, design work and plans and sketches undertaken elsewhere than in the factory of production and necessary for production of such goods are to be included in the assessable value of the goods which is includible in the assessable value; that Tribunal in the case of Mangalore Refinery & Petrochemicals Ltd. Vs. CC., Mangalore reported in 2014 (313) ELT 353 (Tri-Bang.) while interpreting the provisions of Rule 9 ibid of the Customs Valuation Rules, 1988 which is in pari materia with the provisions of Rule 6 of the Central Excise Valuation Rules, 2000 has held that under the Rule 9 (1) of the Customs Valuation Rules, only the value of drawings, designs, etc. necessary for production of the imported goods is includible in the value of the imported goods and the value of the cost of basic engineering designs which merely indicates the lay out relative size etc, being in the nature of buyers assist are not includible in the assessable value, that these submissions could not be made as the matter was decided ex-parte and that the value of the drawings adopted by the Commissioner is arbitrary.

She pleaded that she has no objection if the matter is remanded to the commissioner for de-nova adjudication after hearing the appellant on the merits of the case.

4. Sh. R.K. Grover, ld. DR, defended the impugned order by reiterating the findings of the Commissioner.

5. We have considered the submissions from both the sides and perused the records.

6. It is seen that the first date of hearing had been fixed on 26/2/2014 and had been intimated under the Departments letter dated 6/2/2014 under which the relied upon documents had been supplied. Thereafter under letter no. V (Ch84) 15-373/ADC/Bhi-II/2012/ADJ/3283 dated 28/2/2014 the appellant was informed that the hearing is adjourned to 12/3/3014. However, on the same day, another letter bearing no. V(Ch84)15-373/ADC/BhI-I/2012/ADJ/3314 dated 28/2/2014 was issued to the appellant informing him that the personal hearing has been adjourned to 20/3/2014. The implication of the second letter would be that hearing earlier fixed on 12/3/2014 has been adjourned to 20/3/2014 and hence, the date of hearing fixed on 12/3/2014 cannot be taken as the opportunity for personal hearing and as such the appellant has given only two opportunities for personal hearing on 26/2/2014 and thereafter on 20/3/2014 and as per the mandatory provisions they should have been given at least, one more opportunity for hearing. The appellant had requested for adjournment for hearing for April, 2014 on account of sickness of their Director, but the same was not acceded to. In our view, this decision of the Commissioner is not correct and as such the order has been passed without giving adequate opportunity for personal hearing of the appellant. In view of this, the impugned order is set aside and the matter is remanded to the Commissioner for de-nova decision after hearing the appellant on merits.

7. The appeal as well as stay application stand disposed off, as above.

(Rakesh Kumar) (S.K. Mohanty)

Member (Technical) Member (Judicial)

Ritu