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M/s. Mahindra & Mahindra Ltd. Versus Commissioner of Central Excise And Customs, Nashik

2015 (4) TMI 603 - CESTAT MUMBAI

Valuation of goods - sale of goods through depot - Demand of differential duty - extended period of limitation - Penalty u/s 11AC - Bar of limitation - Held that:- motor vehicle in question is first cleared from the factory to a depot of the appellant and subsequently it is transferred to another depot from where the motor vehicle is sold. - valuation in case of goods sold at depot, shall be governed by the provision of above Rule 7. On careful reading of the said rule we are of the view that pr .....

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e goods is actually sold, the price prevailing at that depot at the time of clearance of the goods from factory shall be the correct transaction value for charging the excise duty. - Accordingly, in terms of Rule 7, in case goods not sold from the factory but transferred to the depot the price prevailing at depot at the time of removal of the goods from the factory shall apply as transaction value. - Decided against the assessee. - Extended period of limitation - Held that:- the demand for t .....

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ssion on the part of the appellant - though demand of duty for period involved in these appeals (except for the period February, 2001 to June 2004) is sustainable on merit, however demand of duty pertaining to the period February 2001 to June 2004 is hereby dropped being time bar. - Decided partly in favour of assessee. - Appeal No. E/120/12-MUM, 262/12-MUM, E/87013-MUM, E/89435/13-MUM, E/87793/14 - Final Order Nos. A/688-692/2015-WZB/EB - Dated:- 25-3-2015 - P. K. Jain, Member (T) And Ramesh Na .....

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the impugned orders are extracted below: Sr.No. Appeal No. Period Duty proposed in the show cause notice (in Rs.) Duty demand confirmed in the impugned order (in Rs.) Penalty (in Rs.). Impugned order-in-appeal date (a) (b) (c) (d) (e) (f) (g) 1 E/120/12 July 2000 to Mar 2010 2,39,39,010 1,33,69,135 1,33,69,135 31.10.2011 2 E/262/12 April 2010 to Sep 2010 2,24,467 20,588 20,588 25.11.2011 3. E/89435/13 Oct 2010 to Aug 2011 4,98,764 1,45,202 1,45,202 13.2.2013 4 E/87013/13 Sep 2011 to Aug 2012 2,5 .....

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uty at the time of clearance of the vehicle from the factory at the price prevailing at the RSO where the vehicles are initially cleared. However, subsequently some of the vehicles are transferred to another RSO, where the prevailing price of the vehicle is higher and vehicle is sold at that higher price. Various show cause notices came to be issued wherein the differential excise duty was proposed to be demanded on the prevailing price of the vehicle at the depot (RSO) from where the actual sal .....

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t where the goods initially cleared. Aggrieved by the said order-in-original the appellant filed appeal before the Commissioner (Appeals), who has upheld the order-in-original of the adjudicating authority. 2. Shri. Gajendra Jain, Ld. Counsel for the appellant submits that in terms of Rule 7, the price prevailing at the place from where the goods are to be sold shall be the correct assessable value. It is his submission that when the motor vehicle is cleared from the factory first time to a part .....

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ll be irrelevant. Therefore the appellant has discharged the excise duty on the correct transaction value. He placed reliance on following judgments. (a) [2010 (255) ELT 568 (Tri-Kolkata)], CCE Vs. Bharat Petroleum Corporation Ltd. (b) [2008 (224) ELT 290 (Tri-Bang.), CCE Vs. Carborandum Universal Ltd. (c) [2005 (181) ELT 27 (Tri-Del)] E.I. Du Pont India Pvt. Ltd. Vs. CCE He submits that in many cases, the motor vehicle transferred from one depot to another depot were sold at higher price then t .....

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no suppression of fact on the part of the appellant for the reason that the issue involved was raised by the audit party and in response, the appellant clarified the query vide their letter dated 15.2.2001, whereas the show cause notice was issued almost after 4 years from the query raised and answered. Therefore the appellant have not suppressed any fact from the Department. Hence the show cause notice dated 19.7.2005 is clearly time-barred. He further submits that in all the subsequent show c .....

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at appellant's interpretation of Rule 7 is mis-leading and is not correct. He submits that in terms of Rule 7 the price prevailing at the place from where the good sold is to be considered as correct assessable value. In the present case though the motor vehicle were initially cleared to particular depot but subsequently transferred to another depot and actual sale has taken place from the subsequent depot, therefore price prevailing at such subsequent depot at the time of clearance of the m .....

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s sold from each such depot. It also clarifies that "in case of inter depot transfer of goods, duty may be initially charged with reference to place of removal from where the goods are actually removed/intended to be sold and by charging differential duty, if any, on the basis of assessable value prevalent at the actual "place of removal?" i.e. storage depot etc. from which the goods are finally sold?". It is his submission that even as per above clarification price prevailin .....

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t or price prevailing at subsequent depot from where the goods is sold shall apply or otherwise. In the context of this issue the relevant Rule 7 of the Central Excise Valuation Rule, 2000 is reproduced below: RULE 7. Where the excisable goods are not sold by the assessee at the time and place of removal but are transferred to a depot, premises of a consignment agent or any other place or premises (hereinafter referred to as "such other place") from where the excisable goods are to be .....

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epot, shall be governed by the provision of above Rule 7. On careful reading of the said rule we are of the view that price prevailing at that depot from where the goods is sold shall apply. Contention of the appellant is not acceptable that at the time of initial clearance of motor vehicle to first depot, goods are intended to be sold from the first depot irrespective whether the motor vehicle first cleared to particular depot and subsequent transferred to another depot. The fact remains that t .....

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e is no room for concept notional value or for normal sale price. Accordingly, in terms of Rule 7, in case goods not sold from the factory but transferred to the depot the price prevailing at depot at the time of removal of the goods from the factory shall apply as transaction value. Where the goods is cleared to first depot and thereafter transferred to second depot or in the case directly supplied to second depot in both the cases since goods is sold from second depot in terms of Rule 7 i.e. & .....

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for the appellant. The reliance of Ld. A.R. on the Board Circular dated 14/8/1996 and judgment of Brakes India Ltd (Supra), since this circular and the judgment are in the context with the old Section 4 and Rule made therein i.e. before 1/7/2000 the are considered only as a persuasive. From Rule 7 it is very clear that price prevailing at the place of sale of goods shall be transaction value in respect of goods cleared from factory to depot. As regard the submission of Ld. Counsel that in some .....

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is removal from factory to their one depot and from their transfer to 2 nd depot and sale of vehicle from 2 nd depot was not disclosed to the Department. This fact was detected by the audit officers, therefore, is it clear that there is suppression of fact on the part of the appellant. Once the fact during a period was suppressed, demand of that period can be raised up till 5 years. In the present case, the demand for the period prior to audit observation raised on January 2001 can be raised up .....

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t the fact of moment of vehicles from factory to 1 st depot and from there to 2 nd depot and sale there from was revealed from audit of the appellant's record in January 2001. Therefore it cannot be said that subsequent to that period there was suppression of fact on the part of appellant. Therefore in our considered view the demand for the period February 2001 to June 2004 becomes time-barred, hence the same is dropped. As regards the submissions of the learned Counsel that penalty under Se .....

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