9911796707
TMI Blog2018 (4) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... n-Original, they are being disposed of by a common order. 2. The relevant facts that arise for consideration, after filtering out unnecessary details, are that the appellant M/s Lokesh Machines Limited (hereinafter referred to as LML) are manufacturers of CNC machines and Cyliner Blocks used for manufacture of vehicle engines. The said LML manufactures CNC machines on their own and cylinder blocks for Mahindra & Mahindra Limited (hereinafter referred to as M&M) at their Medchal and Balanagar units, out of machines supplied by M&M for manufacture of blocks. Appellant LML also finishes the rough castings which are manufactured by M/s Kirloskar Ferrous Industries Ltd (KFIL) for M&M, on receipt of such rough castings from KFIL directly. The said KFIL is manufacturing rough castings on the materials/machineries supplied by M&M. Detailed investigation was carried out wherein it was noticed that LML was clearing the engine blocks and machined blocks to M&M on payment of duty, but the value on which the duty was discharged was not including various costs like amortisation charges, sales tax, freight charges for transportation of castings, cost of free items supplied by M&M and value of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax is deductable from the assessable value but not the CST while determining the value of the cylinder blocks and CMC machines; duty demands on CNC machines, the value which has been taken should be considered as cum duty and excise duty needs to be re-worked out. It is also his submission that when the duty is paid alongwith interest before issuance of show cause notice, penalty cannot be imposed under Section 11 AC of Central Excise Act, 1944 and if the amount of CST is not included, the duty amount paid would be more than the amount of duty liable to be paid and on this ground itself, appeal needs to be allowed. It is his further submission that in case of non inclusion of amortisation charges etc., extended period is not invokable, and hence penalty should not have been imposed. Finally, it is his submission that in view of the foregoing, corrigendum issued to the Order-in-Original may please be set aside and penalty imposed under section 11 AC of Central Excise Act, 1944 be set aside. 4. Ld. Counsel Shri G. Prahlad appearing on behalf of M&M Ltd, draws our attention to the findings recorded by the adjudicating authority and the show cause notice issued by Revenue. It is his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38/- per piece to Rs. 23.80 per piece by relying upon various submissions made by LML, taking amortising cost as nil in respect of clearances of goods from M&M as mentioned in Annexure D-1, D-2 and D-3 to the show cause notice; by excluding differential value wherever job work charges are mentioned as nil; by excluding transportation charges and sales tax w.e.f. 15.12.2014. The adjudicating authority included only part of the cost of supplies made by M&M free of cost and also holding that supplementary invoices raised on M&M, hence not received by LML, duty cannot be demanded. It is his further submission that all evidences indicate that LML have wilfully evaded the central excise duty by under valuing their goods i.e. CNC machines and also the cylinder blocks cleared on job work to M&M. It is his submission that the impugned order to the extent it reduces the duty liability on the said LML be set aside. As regards the penalty imposed on M&M, it is his submission that M&M being principal to the job work from LML, was required to exercise control over them and should have ensured that LML followed the law properly. It is his further submission that by not mentioning the proper provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority has clearly recorded that LML received some amount in cash for the value suppressed by them on CNC machines and has correctly included the value thereof for payment of the amounts on CNC machines. In our view, the adjudicating authority was correct in doing so and we do not find any reason to interfere in such a reasoned order. 10) The appeal of LML on limitation also does not carry the case any further, as we find that it is an accepted fact that there was under valuation of CNC machines and cylinder blocks by not including various costs, which stands confirmed against LML, hence the extended period has been correctly invoked. 11) As regards the claim of Ld. Counsel for LML i.e. corrigendum which was issued on 7.3.2008 to Order-in-Original dated 30.11.2007 is incorrect and needs to be set aside as it enhances the duty liability on the appellant without issuing of show cause notice, we find that this claim of Ld. Counsel is totally baseless, as on perusal of the corrigendum dt. 7.3.2008, we find in para No.2 that the adjudicating authority has specifically stated that the corrigendum does not change or modify any part of the discussions and findings or merits of the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it is on records that M&M are and have been directing LML to follow the correct pattern of valuation and hence they could be under the bonafide impression that M/s LML is following the correct provisions of the law while discharging the duty liability and they could not be held responsible for the same, is the view which any one would carry. On this count, we find that the bonafide impression M&M carried that the goods cleared by LML was on correct discharge of duty liability, cannot be faulted with. Further, we also note that the duty discharged on cylinder blocks cleared by LML was consumed by M&M in the manufacture of vehicles on which duty liability is discharged which would mean that M/s M&M would have availed the cenvat credit of any duty on such cylinder blocks. The discharge of incorrect duty by LML is due to the wrong appreciation of provisions by LML and it cannot be attributed to M&M; we hold that penalty cannot be imposed without bringing on record any evidence indicating that M&M had any role attributable for under valuation by LML. In our view, when the penalty is not imposable under rule 26 itself, the question of imposing penalty on M&M under rule 25 does not ari ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
