TMI Blog2016 (12) TMI 432X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 - MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) AND MR. ANIL G. SHAKKARWAR, MEMBER (TECHNICAL) Shri A.R. Madhav Rao, Mr. Nishant Mishra and Mr. Rajat Mittal, Advocates for the appellants. Shri D.S. Mann, Assistant Commissioner, (A.R.) for the Department. Per Mr. Anil Choudhary : These appeals of assessee have come up before this Tribunal pursuant to order of Hon ble High Court Allahabad in C.E.A. No. 31 of 2005, order dated 14/10/2015 whereby the earlier final order passed by this tribunal dated 19/10/2004 was held unsustainable and set aside and remanded back to this Tribunal with the following directions to passed an order a fresh in accordance with law: - (i) The Tribunal shall examine whether there was any evidence of removal of carbon black by the appellants without invoices clandestinely. (ii) The Tribunal shall examine whether the appellants had received any additional consideration than the consideration mentioned in the invoices for the invoice quantity of carbon black including slightly excess quantity (iii) If Tribunal finds that the appellants had not received any additional consideration for the slightly overfilled quantity of carbon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k feedstock and carbon black is normally of the order of two is to one, thus the yeild percentage being in the range of 50%. The entire exercise is an exercise in approximation. The yield also depends on the grade of conversion oil used in the manufacture. In order to get over this uncertainty in the exact quantum of carbon black produced, the appellants adopt the method of accounting the carbon black manufactured in terms of the quantities packed in the three ply paper bags. 4. Further due to the sticky nature of carbon black it is impossible to precisely pack 25 KG of carbon black in each paperback. The carbon black is packed in individual paper bags by means of automatic packing machine on drawing the loose carbon black stored in the silos. The carbon back so packed in the bag would be slightly excess or less than the standard weight of 25 kg., which every bag is supposed to contain. As carbon black is highly priced at about ₹ 22,000/- to 28,000/- per kg. approx during the relevant period, the customer would not grudge if they receive a quantity slightly more than the quantity indicated in the invoice. On the other hand the customer will create a furore, if they receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the weight of carbon black in standard tonnage and the weight of the packing material is also indicated in the invoice. There is also a clear indication that the gross weight is in approximate terms. Since the appellants overfill their bags to a marginal extent, the total quantity received by the customer would be slightly more than the quantity indicated in the invoice. For instance if 9 m.t. is contracted for sale to a customer the quantity of carbon black that is actually received by him would be in the range of 9 m.t. plus 0.3% of 9 m.t. or 5 kg. or a total quantity of 9005 KG. This excess quantity of 5 kg. works out to about 0.32 to 0.5% of the total weight. The customer of the appellant does not pay the appellant any consideration for this excess quantity. In other words if the rate of 1 m.t. of carbon black is contracted at ₹ 100 per m.t. then the total invoice value in the case of a sale of 9 m.t. would be ₹ 900. The actual quantity of carbon black received by the customer will be 9004 kg approximately, but the appellant would receive only ₹ 900. In other words, in real terms, the amount of 900 is the sale price not for 9000 kg but for 9004 kg. Since dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty. Further observing that the penalty imposed is on higher side reduced the same to ₹ 20 lakhs. Further, held that no penalty is imposable on the other two appellants Shri Anand Arya, Director and Shri A.K. Singh, G.M. (Sales) in absence of any mens rea on their part. 9. Being aggrieved the appellant had approached Hon'ble Allahabad High Court in appeal and the Hon ble High Court have been pleased to set aside the order dated 19/10/2004 of this Tribunal with directions as aforementioned; and also made the following observations:- (i) The Adjudicating Authority in pursuance of the remand order of this Tribunal made inquiries and collected some information at the back of the appellant with respect to the trade practice of overfilling of the bag. The Adjudicating Authority neither confronted the appellant with the alleged inquiry report regarding trade practice of overfilling not afforded opportunity to rebut by giving any copy of such report. (ii) The High Court also noticed that the appellant have raised the issue that the duty on carbon black is on ad valorem basis. The department had conducted investigation with one of the purchaser namely Modi Tyre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Section 3(i) thereof states that there shall be levied and collected in the prescribed manner, a duty of excise on excisable goods manufactured in India at the rates set forth in the first Schedule. Neither Section 3 nor the first Schedule lays down the manner in which ad valorem price of the goods has to be calculated. This is found in Section 4 of the Act. Section 4 of the Act lays down the measure by reference to which the duty of excise is to be assessed. The duty of excise is linked and chargeable with reference to the value of the exercisable goods and the value is further defined in express terms by the said Section. In every case, the fundamental criterion for computing the value of an excisable article is sold by the manufacturer, where the buyer is not a related person and the price is the sole consideration. If these conditions are satisfied and proved to the satisfaction of the adjudicating authority, then, the burden which lies on the assessee under Section 4(1)(a) would have been discharged and the price would not be ignored and the transaction would fall under the protective umbrella contained in the Section itself. The Hon ble High Court further observed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore in the bags to the extent of 0.80 for the sake of goodwill and commercial consideration is neither wrong nor amounts to clandestine removal. 13. It is also an admitted fact on record that there is no revision of the pricelist under Section 35A of the Act during the relevant period as aforementioned. It is further a fact on record that an enquiry made by the Revenue from the customer of the appellant namely Modi Tyres there is admission on the part of the customer of receipt of slightly excess quantity than the quantity in invoice. Further, admitted fact on record is that the appellants have neither charged or received any extra consideration for the same. Accordingly, prays for allowing the appeal with consequential benefits. 14. The learned A.R. for Revenue relies on the impugned order. It is further contended that, that as the appellant is entitled to modvat on packing material that is no question of double duty on the same. So far the reliance have been placed by the appellant's counsel on Circular No.876/14/2008-CX dated 20/10/2008 regarding allowance of maximum permissible error on net quantity by weight declared in package of cement wherein the CBEC have explain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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