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2015 (10) TMI 2266 - CESTAT MUMBAI

2015 (10) TMI 2266 - CESTAT MUMBAI - TMI - Penalty u/s 11AC - valuation - inclusion of cost of moulds - Interest u/s 11AB - Held that:- Period involved in the present case is from 1996 to 2000 and under the old Central Excise Valuation Rules there was no specific mention of adding the proportionate cost of moulds. It is true that this Tribunal vide the order in the case of Flex Industries Ltd. (1997 (1) TMI 173 - CEGAT, NEW DELHI) has held that the said cost would be includible. However, that by .....

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fter computed the differential duty.

The respondent B. Tej Enterprises paid the duty suo motu without any enquiries or any objection from the department. This conduct of the respondent clearly indicates that there was no intention leave alone wilful intention to evade payment of duty. Under the circumstances, in our considered view, this is not a case of imposition of penalty under Section 11AC or imposition of interest under the old Section 11AB (which again requires fraud, collusio .....

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Decided against Revenue. - APPEAL Nos. E/320 & 321/04-Mum - Dated:- 18-8-2015 - Mr. P.K. Jain, Member (Technical) And Mr. S.S. Garg, Member (Judicial) Shri V.K. Agrawal, Additional Commissioner (AR) : For the Petitioner Shri Vinay Sejpal, Advocate : For the Respondents 1 & 2 Shri K.A. Photographer, Asstt. Vice President : For the Respondent No. 3 ORDER Per: P.K. Jain These appeals are filed by Revenue against the order passed by Commissioner (Appeals), dated 31.10.2003. The said order in tur .....

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For manufacture of such plastic parts, certain moulds were required. These moulds were provided/supplied by Godrej Appliances Ltd. to B. Tej Enterprises and B. Tej Enterprises was not doing any modification in the moulds and after use, was also returning to appellant 3 viz. Godrej Appliances Ltd. as and when directed by them. The issue involved is inclusion of amortization cost of such moulds in the assessable value of the plastic moulded components manufactured by B. Tej Enterprises. The said .....

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goods is includible in the assessable value. The respondents are not disputing that the proportionate cost was required to be included while determining the assessable value and hence now paying duty. During the period 1996 to 2000, however, the respondents paid duty without including the said proportionate cost. After the introduction of a new Section 4 in the Central Excise Act and consequent new Central Excise Valuation Rules, they had started including the proportionate cost. Later on, they .....

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started investigating the case by recording certain statements and issued a show cause notice demanding interest under Section 11AB, penalty under Section 11AC and also appropriating the amount already paid. The original authority confirmed the allegations in the show cause notice and, therefore, confirmed the interest and penalty. Aggrieved by the said order of the original authority, the respondents filed appeal before the Commissioner (Appeals). The Commissioner (Appeals) has allowed the app .....

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at the fact that the proportionate cost of the moulds is required to be added is a settled issue as per this Tribunals judgment in the case of Flex Industries Ltd. which was pronounced as early as 17.1.1997. The learned AR further submitted that the said judgment held the field and it is only during 1999 some contrary judgments were issued by the Tribunal and the matter was referred to a five-member bench in the case of Mutual Industries Ltd. reported in 2000 (117) ELT 578 and even in that case .....

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The learned AR submitted the following case laws in support of his contention that the extended period of limitation is applicable in the present facts of the case and, therefore, interest under Section 11AB and penalty under Section 11AC as also penalty on individual is imposable:- (i) Flex Industries Ltd. vs. CCE, Meerut reported in 1997 (91) ELT 120 (T); (ii) Flex Laminators & Flex Industries Ltd. vs. CCE, Meerut reported in 2004 (163) ELT 297 (SC); (iii) Mutual Industries Ltd. vs. CCE, M .....

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responding Central Excise Valuation Rules, there was no specific mention about the amortization cost to be included in the value of the goods. It is only after the introduction of new Section 4 and new Valuation Rules that the Rules specifically speak of including the amortization cost of moulds while computing the assessable value. He further submitted that his client was not aware of including such cost and, therefore, the same was not included by mistake. However, the mistake was a bona fide .....

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the moulds and Chartered Accountant certificate etc. to understand and know the amortization cost. It was further submitted that after getting the details, his client on their own paid the differential duty amount. It was also submitted that during this period no enquiries whatsoever were made by any central excise official and the whole action was a bona fide action and was an action to follow the Rules properly. He further submitted that after the payment of the said amount, the department st .....

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ent has paid the differential duty which was even beyond the period of five years prescribed under the law. He further submitted that in the first show cause notice, out of an amount involved of ₹ 4,90,122/-, ₹ 4,59,620/- is pertaining to these two years which was not even legally payable. However, the respondent being a law abiding citizen had paid the duty suo motu and the department instead of appreciating the action, started investigation and issued the show cause notice. He furt .....

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olved in the present case is upto 2000 and the old Section 11AB would be applicable. He further submitted that no penalty is imposable on Shri Vinod T. Jain, partner, under Rule 209A as there was no intention to evade any duty. 4.1 Shri K.A. Photographer, Assistant Vice President from Godrej & Boyce Mfg. Co. Ltd., on behalf of Godrej Appliances Ltd., submitted that they have large number of vendors and they do not keep track of valuation of each and every vendor, even though they do guide th .....

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. At the outset, we observe that there is no dispute about the duty liability. The dispute is only relating to imposition of penalty under Section 11AC, interest under old Section 11AB and penalty under other rules such as Rule 209A etc. As described in the brief of the case, we observe that the period involved in the present case is from 1996 to 2000 and under the old Central Excise Valuation Rules there was no specific mention of adding the proportionate cost of moulds. It is true that this Tr .....

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