2019-TIOL-3344-CESTAT-ALL
International Tobacco Company Pvt Ltd Vs CCE & ST
CX - Vide impugned order, the original authority disallowed cenvat credit to the tune of Rs.2.89 lakhs availed by the appellant during the period from April 2007 to March 2010, holding that the said credit was covered by the exclusion clause in rule 2(l) of Cenvat Credit Rules, 2004 which disallows cenvat credit on 'commercial or industrial construction service' and 'works contract service' etc. - appeal to CESTAT.
Held: It is found that in view of the said exclusion clause, original authority disallowed the said cenvat credit to the appellant - it is also noted that the said clause was inserted w.e.f. 1.4.2011 - further, the Punjab & Haryana High Court in the case of Bellsonica Auto Components (India) Pvt. Ltd. [2015 (40) S.T.R. 41 (P&H] has held in para 11 of their ruling that the said amendment was not retrospective - in view of the settled position of law, the said credit of Rs.2.89 lakhs was admissible to the appellant - in view of the same, appeal is allowed : CESTAT [para 2]
- Appeal allowed: ALLAHABAD CESTAT
2019-TIOL-3343-CESTAT-MUM
Industrial Tubes Manufacturers Pvt Ltd Vs CCE
CX - Appellant 1 is engaged in manufacture of Copper/ Copper Alloy tubes falling under Chapter 78 of the First Schedule to Central Excise Tariff Act, 1985 - On receipt of intelligence to the effect that they were indulging in duty evasion by resorting to under valuation of goods their premises was visited by the officers of Central Excise on 23.05.2008 - Demand issued and confirmed and penalties imposed along with interest - Following are the questions for consideration by the Tribunal - (i) What would be principles of valuation of the goods under consideration? (ii) What should be the value of raw material in the case? (iii) Whether extended period of limitation as proviso to section 11A(1) of Central Excise Act, 1944 can be invoked in the facts and circumstances of this case? (iv) Whether penalty under section 11AC justifiable in the facts of the present case? (v) Whether penalty under rule 26 of Central Excise Rules, 1944 justifiable on the officers of the Company in the present case?
Held: What would be principles of valuation of the goods under consideration ?
There is no dispute that in the present case the finished goods namely 90/10 New Cupro Nickel Tubes, have been manufactured and supplied by the Appellant 1 to M/s. NTPC and M/s. Gujarat Industrial Power Corporation Limited [M/s.GIPCL] from the raw material supplied to them by the said customers - since these goods have been processed and manufactured out of the raw material supplied by the customers, appellants have claimed that valuation of the goods should be done treating the activities undertaken by them as job work, and by applying the principles laid down by the Apex Court in case of Ujagar Prints - Revenue does not dispute the said position on the contrary as per Circular No.619/10/2002-CX dated 19.2.2002, it has been clarified stating that “ after 1.7.2000, in respect of goods manufactured on job-work basis, valuation would be governed by Rule 11 of the new Valuation Rules of 2000 read with rule 6 read with the above decisions of the Apex Court in the cases of Ujagar Prints Ltd. - 2002-TIOL-03-SC-CX-CB and Pawan Biscuits Co. Pvt. Ltd. - 2002-TIOL-04-SC-CX" - since the facts are not in dispute, the Bench is of the view that in the present case the valuation of the finished goods has to be determined in the manner as clarified by the Board in terms of the above Circular: CESTAT
What should be the value of raw material in the case ?
In the case of the goods processed on behalf of M/s.NTPC, the assessable value as per the principles laid down by the Apex Court in decisions in the cases of Ujagar Prints Ltd. and Pawan Biscuits Co. Pvt. Ltd. was determined as Rs.284.40 - Appellant 1 had discharged the duty by taking this value as the assessable value - in the case of the goods processed on behalf of M/s.GIPCL, the assessable value was determined as Rs.230.50 - Appellant 1 had discharged the duty by taking this value as the assessable value - Revenue has in the SCN disputed the assessable so determined, not on the basis of the principles of valuation to be adopted, but has disputed the declared landed cost of the raw materials provided by M/s.NTPC and M/s.GIPCL - Commissioner has, while adjudicating the case, accepted the value declared by M/s.NTPC for the raw material supplied - this finding of Commissioner has been challenged by the Revenue in its appeal - the Bench is in agreement with the contention of the Revenue, because no reasonable basis for arriving at the said declared value of the raw material is coming forth - the so called auction deed not resulted in the actual sale of goods by M/s.NTPC themselves - Commissioner should have investigated if this price was declared price of the goods supplied for the job work then why M/s.NTPC have not accepted the bid received in auction and cleared the said goods to the bidder - there can be number of reasons for not acceptance of the bid including that the bid price was much below the reserve price kept by M/s.NTPC - the auction which did not result in actual sale of the goods cannot be said to be a reasonable basis for determining the value of the same goods when supplied for job work - hence, no merits found in the findings of Commissioner in para 46 of his order - from the findings as recorded at paras 47, 48 and 49 by the Commissioner in his order, it is found that he has, in similar circumstances, agreed to the allegation in the SCN, for mis-declaration of the value of the raw material by M/s.GIPCL - indeed the value as declared by M/s.GIPCL is based on certain value which they came across in respect of the brass tubes supplied to them by M/s.BHEL in the year 1990-91 - how the declaration made on the basis of the value of the fresh tubes in 1990- 91, be relevant for declaring the value of the used and junked brass tubes in 2006-07 - further, it should be acknowledged that scrap in case of metal has been defined as per section Note 8 to Section XV as "metal waste and scrap from the manufacture or mechanical working of metals, and metal goods definitely not usable as such because of breakage, cutting-up, wear or other reasons" - the Supreme Court has in case of LML Ltd [1997 (94) ELT 273 (SC)] held "10. It is quite evident that those portions of cut sheets which are used in the manufacture of ancillary items cannot be regarded as waste and scrap. As per the aforesaid definition it is only that `waste and scrap' of iron or steel which is fit only for the recovery of metal or for use in manufacture of chemicals which could fall under that category." - from the above, it is quite evident that the value of the raw material which was supplied should have been determined on the basis of the metal recovery from the said scrapped tubes - the metal content read with the available price of the metal as per MCX would have been the best proxy for determination of the value of the scarp supplied - in the view of the Bench, the Commissioner should have rejected the declared value of raw material supplied by M/s.NTPC and M/s.GIPCL and determined the value of same by applying the principles consistent with the norm of metal recovery from the waste tubes supplied for reprocessing - the matter for redetermination of the value of raw material needs to be reconsidered by the Commissioner and proper value arrived at on the basis of evidences available on records: CESTAT
Whether extended period of limitation as proviso to section 11A(1) of Central Excise Act, 1944 can be invoked in the facts and circumstances of this case ?
In the present case there is misdeclaration of value by the appellant - in case of M/s.GIPCL, Commissioner has given a finding that the said mis-declaration has been deliberate and the modus operandi was devised between the Appellant 1 and M/s.GIPCL in a meeting held between the two - further, by adopting this modus operandi the assessable value declared by the Appellant-1 is lower than the value quoted by the Appellant 1 themselves in the technical bid - since Appellant-1 have, in association with M/s GIPCL, devised this modus operandi for evading the duty, extended period of limitation as per proviso to section 11A(1) is applicable in the present case - in case of M/s.NTPC, Commissioner has not recorded any finding for invoking or not invoking the extended period of limitation - hence, the matter is remanded to Commissioner for recording a specific finding in this respect after considering all the evidences as available on record: CESTAT
Whether penalty under Section 11AC justifiable in the facts of the present case ?
It is now settled principle in law that penalty under section 11AC is justified in case where the provision of extended period of limitation as per proviso to section 11A(1) is held to be invokable - reference is made to the decision of the Apex in the cases of Dharmendra Textile Processor - 2008-TIOL-192-SC-CX-LB and Rajasthan Spinning and Weaving Mills - 2009-TIOL-63-SC-CX - hence, it is held that penalty under section 11AC is imposable in the present case - since for determination of value and limitation issues in respect of supplies made to M/s.NTPC is being remanded to the Commissioner, the Bench is of the view that Commissioner should determine this aspect after rendering a finding on the other two issues - thus, the matter in this respect is remanded back to the Commissioner for redetermination of quantum of penalty under section 11AC: CESTAT
Whether penalty under Rule 26 of Central Excise Rules, 1944 justifiable on the officers of the Company in the present case ?
Commissioner has in para 50 and 51 of his order recorded his findings in this regard and has held that the officers working in the company are liable to penalty under rule 26 of the Central Excise Rules, 2002 - however, since the issue in respect of determination of the assessable value and period of limitation in respect of supplies made to M/s.NTPC is being remanded back to the adjudicating authority, and in case of supplies made to M/s.GIPCL for redetermination of assessable value, the penalties on these officers are set aside and matter remanded for redetermination of penalties on the said three officers namely Shri T U Shenava Managing Director, Shri T V Shetty, Marketing Manager and Shri Vasant Nadar, Authorized Signatory & Factory incharge of M/s.ITMPL: CESTAT
Since interest is associated with the short payment of duty on the due date, no hesitation in sustaining the demand of interest under section 11AB - in view of discussions as above, the order of the Commissioner is set aside to the extent indicated above and the matter remanded to the adjudicating authority for redetermination of the issues - all the five appeals are allowed and matter remanded to the adjudicating authority: CESTAT [para 5.3, 5.4, 5.5, 5.6, 5.7, 5.8, 6.1]
- Appeals allowed/Matter remanded: MUMBAI CESTAT
2019-TIOL-3342-CESTAT-CHD
Indopol Food Processing Machinery Vs CCE & ST
CX - Appellants are manufacturing food processing machines and its parts and automobile components for JCB, elevator and conveyors etc. and classifying these goods under heading No.8437 as "machinery used in Milling Industry" where the tariff rate is nil, but the department held that these goods are classifiable under Heading No.8428, as "other lifting, handling, loading or unloading machines (for example Lifts, escalators, conveyors etc.)" - on such basis, impugned order was passed, classifying the goods under Heading No.8428 – appeal to CESTAT.
Held: Said issue came up before this Tribunal in the case of Alpsco Graintech Pvt. Ltd. [F inal Order No. A/63373-63375/2018 dated 25.10.2018 ] and Annapurna Agronics Machinery Pvt. Ltd. [Final Order No. A/63546/2018 dated 5.12.2018 ] wherein Tribunal has observed that “... the conveyors and elevators specifically manufactured as part of rice milling machinery alongwith other machinery of rice by the appellant merit classification under chapter heading No. 8437 of CETA, 1985…” – in view of the above, it is held that the conveyors and elevators etc. specifically manufactured by the appellant for food processing machinery alongwith other machinery merit classification under Chapter 8437 of CETA, 1985 - therefore, the impugned order deserves no merits and the same is set-aside - appeal is allowed with consequential relief: CESTAT [para 6, 7, 8]
- Appeal allowed: CHANDIGARH CESTAT
