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2015 (9) TMI 350 - BOMBAY HIGH COURT

2015 (9) TMI 350 - BOMBAY HIGH COURT - 2015 (322) E.L.T. 110 (Bom.) - Demand of penalty - willful mis-statement or suppression of facts or contravention of any of the provisions of the Central Excise Act or the Rules - Intention to evade duty - Held that:- The adjudicating authority having not recorded any such satisfaction there was no justification for upholding the imposition of penalty. The Tribunal may have recorded a single line conclusion and with regard to requantification of duty disput .....

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tion is only in the event the ingredients necessary to be satisfied are attracted and so satisfied - Decided against Revenue. - Central Excise Appeal No. 65 of 2005 - Dated:- 11-3-2015 - S.C. Dharmadhikari & Sunil P. Deshmukh, JJ. For the Petitioner : Mr. A.S. Rao a/w. Mr.S.D. Bhosale, Advocate For the Respondent : Ms. Anjali Hirawat a/w. Mr. Jas Sanghavi & Ms. Niyati Hakani i/b. M/s. PDS Legal, Advocate ORDER P.C. : Having heard both sides. We are of the view that the Appeal raises subs .....

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eld that amortization and addition of value of moulds is no longer resintegra and only requantification of duty is involved, no penalty is called for is correct in view of proviso (3) to Section 11AC of Central Excise Act, 1944 wherein it is provided that when duty determined is reduced or increased by the appellate Tribunal, the duty determined is reduced or increased by the appellate Tribunal, the duty as reduced or increased as the case may be, shall be taken into account? 3. Whether penalty .....

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Rao appearing on behalf of the Revenue in support of this Appeal would submit that the Tribunal has failed to take note of the clear language of Section 11AC of the Central Excise Act, 1944, as applicable, at the relevant time. The language admits of no construction other than a mandate to impose penalty. Thus, this provision being mandatory, the Tribunal should have sustained the imposition of penalty which also should have been sustained because there was nothing unclear or unsettled about the .....

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er hand, Ms.Anjali Hirawat appearing on behalf of the assessee would submit that the Tribunal's view is neither perverse nor vitiated by any error of law apparent on the face of the record. The Tribunal has rightly observed that the issue was of requantification and did not justify imposition of penalty. The penalty has been rightly deleted. 5 In any event, there was no finding in the Order-in-Original demonstrating willful mis-statement or suppression of facts or contravention of any of the .....

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mmissioner of Central Excise, Chandigarh-I 2007(216)E.L.T.177(S.C.) . She also relies upon an order passed by the Tribunal in the case of Star Glass Works Vs. Commissioner of Central Excise, Mumbai 2003(162)E.L.T.367(Tri.-Mumbai) . She submits that this order of the Tribunal has been affirmed by the Hon'ble the Supreme Court of India. She, therefore, submits that the Appeal be dismissed. 6 The provisions enabling imposition of penalty are to be found in Section 11AC of the Central Excise Act .....

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of the Central Excise Act, 1944, shall also be liable to pay a penalty equal to the dues so determined. 7 We are not concerned with the proviso to this section. 8 The Order-in-original indicates as to how the assessee was proceeded against. The assessee recovered tooling, development and modification charges for moulds to be used for manufacture of plastic moulded parts from M/s. Telco for their vehicle Tata Safari. These charges were recovered by issuance of Debit Notes during the period of Se .....

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t of M/s. TELCO, the assessee was to develop the moulds for manufacture of the aforementioned parts. It was arranged between the parties that 60% of the cost of moulds would be borne by M/s.TELCO and 40% would be borne by the assessee. Out of this 40% of the cost of moulds, 25% was absorbed by the assessee and 15% was amortised for 50000 sets. It was also agreed between the parties that for development of moulds for Assembly Rear Bumper, 50% of the costs of moulds was to be borne by M/s.Telco an .....

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It was alleged in the show cause notice that the moulds developed by M/s.TELCO, are the sole property of the assessee. It is reflected as assets in their books of account. Hence, there is no question of taking the amortised costs of moulds with the assessable value of the moulded parts of plastic cleared by them to M/s.TELCO. The reply of the assessee inter-alia was that in similar cases the demand for lumpsum recovered as mould development charges from various customers was confirmed by the Co .....

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ar and the arguments of the assessee based on the Tribunal's order. 9 Paragraph 47 of the Order-in-original indicates as to how there were two orders of the Tribunal and which apparently took conflicting views. Eventually, the matter was resolved by a larger Bench of the Tribunal in the case of Mutual Industries Ltd. Vs. Commissioner of Central Excise - 2000 (117) E.L.T. 578 (Tri.). The Tribunal held that so long as the mould is being used in the manufacture of the finished product it contri .....

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stigations and the statements of the executives and officials of the assessees and M/s. TELCO recorded during the course of the same. However, we do not find anything in the Order-inoriginal barring a statement that the assessee have not amortised the costs of moulds recorded from M/s. TELCO, and this itself tantamounts to misrepresentation as mis-statement of facts. Beyond such a finding, we do not have anything on record which would enable us to conclude that the authorities were satisfied tha .....

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