2005 (98) ECC 337 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(A)

Shri V.K. Agrawal, Member (T) and Shri P.S. Bajaj, Member (J)

CCE, Faridabad

Versus

Ilpea Paramount Pvt. Ltd.

Appeal No. E/1060/2004-NB(A)

[Arising out of Order-in-Appeal No. 501-CE/Appl/Div-II/DLH-IV/03 dated 12.12.2003 of the Commissioner of Central Excise (Appeals), Faridabad]

Final Order No. 879/2004-NB(A), dt. 11.8.2004, Certified on 2.9.2004

Demand (C. Excise)

Limitation -- `Pulsator' with `bush' -- Electrolux Voltas Ltd., to whom the respondents supplied the `pulsator' with `bush' fitted under Rule 57F(4) challans, could take the credit -- While determining the assessable value of pulsator, value of the bush was not included -- No record regarding this suppression of material -- Therefore extended period of limitation for raising the duty demand was rightly invoked against respondent could not be said as time barred.

PRESENT :

Smt. K.A. Mishra, SDR for the appellant.

Shri K.L. Handa, Consultant for the respondent.

Cases Cited :

1. Jay Yuhshin Ltd. v. CCE, New Delhi, 2000 (72) ECC 407 (Tri-LB)....................... [Para 5]

2. R.H. Industries, 2001 (133) ELT 798 (Tri)......................................................... [Para 4]

3. Tamil Nadu Housing Board case 2002 (82) ECC 462 (SC)................................. [Para 5]

Per : P.S. Bajaj

In this appeal, the Revenue has questioned the validity of the impugned Order-in-Appeal vide which the Commissioner (Appeals) has set aside the duty demand and penalty as confirmed by the adjudicating authority against the respondent, by holding the same to be time barred.

2. We have heard both the sides.

3. The facts are not much in dispute. The appellants are engaged in the manufacture of Pulsator during the period in question (April 1998 to March, 2001). They received item "Bush" from M/s. Electrolux Voltas Ltd. under Rule 57F(4) challans and inserted the same into their product "Pulsator", which they cleared on payment of duty. But while determining the assessable value of their product Pulsator, they did not include the value of the bush. On that accounts, the duty demand of Rs. 73,042 with equal amount of penalty under Section 11AC and of Rs. 10,000 under erstwhile Rule 173Q, was confirmed against them by the adjudicating authority after serving them with a show cause notice, through Order-in-Original.

4. Feeling aggrieved by that order, the respondents filed appeal before the Commissioner (Appeals). The Commissioner (Appeals) has affirmed the findings of the adjudicating authority in respect of inclusion of the value of the bush in the value of the pulsator for the purpose of determination of assessable value. He has rejected the plea of the respondents that since they received the bush free of cost under Rule 57F(4) challan and did not avail any Modvat credit and that their supplier debited 10% of its value before sending the same to them and as such its value is not required to be included in the value of the pulsator, on the ground that the assessable value of a product under the law has to be its intrinsic value i.e. inclusion of the value of all its constituents, as laid down by the Tribunal in the case of R.H. Industries, 2001 (133) ELT 798 (Tri). The "bush" being the integral part of the product "pulsator" manufactured by the respondents and a complete product in itself, its value was required to be included in the value of the pulsator for the purpose of determination of assessable value. The findings of the Commissioner (Appeals), to this effect, had not been challenged by the respondents by filing any cross objections and as such are binding on them. Therefore, the contention of the Ld. Counsel that the value of the bush was not required to be added in the value of the pulsator for determining the duty, cannot be entertained and accepted for the reasons detailed above. The duty demand has been, therefore, rightly raised against the respondents.

5. The Ld. Commissioner (Appeals) has set aside the duty demand against the respondents only on the ground of limitation by holding that the extended period could not be invoked as it was a case of Revenue neutrality as the Modvat credit was available to the assessee. He has relied upon the ratio of law laid down in Tamil Nadu Housing Board case 2002 (82) ECC 462 (SC) : 1994 (74) ELT 9 (SC) for coming to the conclusion that the respondents were working under a bona fide belief and in a case of Revenue neutrality, there could not be any intention to evade payment of duty and as such extended period could not be invoked. But we are unable to subscribe to this view of the Ld. Commissioner (Appeals). He has relied upon the ratio of the law laid down by the Larger Bench in Jay Yuhshin Ltd. v. CCE, New Delhi, 2000 (72) ECC 407 (LB) : 2000 (119) ELT 718 (Tri-LB) wherein it has been observed that, (with particular reference to modvat scheme), it has to be shown that the revenue neutral situation comes about in relation to the credit available to the assessee himself and not by way of availability of credit to the buyer of assessee's manufactured goods. No credit could be claimed by the respondents in this case on the item "bush" as they received it under 57F(4) challans free of cost. The fact that M/s. Electrolux Voltas Ltd., to whom the respondents supplied the "pulsator" with "bush" fitted therein, could take the credit, could not be construed as a case of revenue neutrality and a circumstance reflecting the bona fide of the respondents with no intention to evade the duty. There is nothing on record to suggest if the respondents, at any stage, informed the department that they would not adding the value of the bush in the value of their product `pulsator' for having received Rule 57F(4) challans. There was obviously suppression of this material fact by them from the department and this suppression on their part could not be said to be innocent, rather it was deliberate with intent to evade the payment of appropriate duty on their final product "pulsator". Therefore, the extended period of limitation for raising the duty demand had been rightly invoked against the respondents. The ratio of the law laid down in Tamil Nadu Housing Board (supra) had been wrongly applied by the Commissioner (Appeals) to the facts of the present case. Therefore, his findings holding the duty demand as time barred are set aside.

6. In view of the discussion made above, the duty demand of Rs. 73,042 is confirmed against the respondents. However, keeping in view the facts and circumstances, the penalty on them is reduced to Rs. 10,000. The respondents may lodge Modvat credit claim with the competent authority, which will be decided as per the law. The appeal of the Revenue accordingly stands allowed.

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