TMI Blog2018 (12) TMI 1470X X X X Extracts X X X X X X X X Extracts X X X X ..... o be added for determining the assessable value of the finished goods cleared by the appellant. CENVAT Credit - automobile cess - Held that:- In terms of Rule 3 of the Credit Rules, a manufacturer is entitled to avail Cenvat credit only of excise duty as mentioned under the Excise Act, specified additional duties and also of education cess, national calamity contingency duty, etc. Cenvat credit is also available on all of the above duties paid during the time of import. However, the cess levied under various other acts, though collected as in manner similar to excise duty in the respective acts, is not in the list of duties eligible for Cenvat credit - None of the authorities cited by the appellant have stated in respect of admissibility of CENVAT Credit in respect of the automobile cess. Thus the submission of the appellant in this respect is not tenable. Time Limitation - Held that:- The issue of inclusion of the taxes and fees which were not Cenvatable has been decided by the Apex Court in case of Dai Ichi Karkaria in the year 1999. After the said decision, there can be no justification for non inclusion of the same in assessable value. Appellant cannot claim that they wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that appellants have suppressed the facts by an act of omission and commission. I am therefore inclined to agree with the findings of the original adjudicating authority and pass the following order. 13. I uphold the order of the original adjudicating authority and set aside the appeal. 2.1 The appellants are engaged in the manufacture of load bodies in their factory and these load bodies are mounted on the duty paid chassis received free of cost from chassis manufacturer viz M/s Tata Motors Ltd. 2.2 Appellants were availing the CENVAT credit of the in respect of the duty paid chassis received free of cost from M/s Tata Motors and were adding the cost of chassis in the value of load bodies as declared by the chassis manufacturer. 2.3 The appellants did not include the element of automobile cess in their input value and thereby short paid the duty to that extent. 2.4 A show cause notice dated 11.08.2008 was issued to them demanding the duty short paid by invoking extended period of limitation as provided for under proviso to Section 11A(1) of the Central Excise Act, 1944. Interest was also demanded under Section 11AB and penalty under Section 11AC read with Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue it is included all the expenses including the transport charges, insurance charges, handling charges etc. The value do not include the duty of excise, sales tax and other taxes. The 0.125% Automobile Cess on Motor Vehicle is being a Excise Duty is not includible in the assessable value. Thus the charge of non inclusion of 0.125% CESS in the assessable value is not legally tenable. iii. The decision of Supreme Court in the case of Dai Ichi Kakaria is not relevant in the present situation. iv. Demand is time barred on the ground of limitation. v. No interest and penalty are impossible on them as they have valued the goods as per the Section 4(1() read with Valuation Rules, 2000. and under bonafide belief. As they had no intention to evade payment of duty they are not guilty of any kind of misstatement, suppression or fraud etc., Thus the demand of interest and penalty is not tenable. 4.1 We have heard Shri S Narayanan Learned Advocate and Shri N Prabhudesai, Superintendent Authorized Representative for the revenue. 4.2 Arguing for the appellant learned advocate submitted- i. The thrust of the case of revenue is that as per the decision of Apex Court in case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 4(1)(b) of the Act read with Rule 6 of the Valuation Rules should be reckoned as it would be reckoned by a man of commerce. We think that such realism must inform the meaning that the Courts give to words of a commercial nature, like cost, which are not defined in the statutes which use them. A man of commerce would, in our view, look at the matter thus : I paid ₹ 100/- to the seller of the raw material as the price thereof. The seller of the raw material had paid ₹ 10/- as the excise duty thereon. Consequent upon purchasing the raw material and by virtue of the Modvat scheme, I have become entitled to the credit of ₹ 10/- with the excise authorities and can utilise this credit when I pay excise duty on my finished product. The real cost of the raw material (exclusive of freight, insurance and the like) to me is, therefore, ₹ 90/-. In reckoning the cost of the final product I would include ₹ 90/- on this account. This, in real terms, is the cost of the raw material (exclusive of freight, insurance and the like) and it is this, in our view, which should properly be included in computing the cost of the excisable product. 25. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenable. 5.4 Since automobile is not Cenvatable, in view of the decision of the Apex Court in case of Dai Ichi Karkaria, supra, same needs to be added for determining the assessable value of the finished goods cleared by the appellant. 6.1 On the issue of limitation also we do not find much merits in the submissions of the appellant. The issue of inclusion of the taxes and fees which were not Cenvatable has been decided by the Apex Court in case of Dai Ichi Karkaria in the year 1999. After the said decision, there can be no justification for non inclusion of the same in assessable value. Appellant cannot claim that they were under bonafide belief that the said automobile cess was not includable after the decision of the Apex Court. Further all these details were not made available to the department while filling the returns. Hence there was suppression of material facts from the revenue with the intention to evade, accordingly demand of duty short paid by invoking extended period of limitation cannot be faulted in the present case. In similar circumstances, tribunal has in case of Air Cell Digi link India Ltd [2006 (3) STR 386 (T)] held- 4. Another argument, which h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low any of the statutory procedures, the appellant had clearly suppressed the facts from the department with an intent to evade service tax. In these circumstances, the confirmation of duty demand invoking the extended period of time along with interest thereon cannot be faulted. Consequently, the appellant is also liable to penalty under the provisions of the Finance Act, 1994. 6.3 Thus in our view extended period of limitation has been correctly invoked for demanding the duty short paid. 7.1 Demand for interest is natural consequence of the delay in payment of the duty from the due date. Since the duty as determined under Section 11A(2) has been short paid on the due date, demand for interest under Section 11AB cannot be faulted with. 8.1 Since we have held that necessary ingredients to invoke extended period of limitation are present in the case, penalty under Section 11AC read with rule 25 of the Central Excise Rules, 2002 justified. Hon ble Apex Court has in case of Rajasthan Spinning and Weaving Mills [2009 (238) ELT 3 (SC)] held as follows: 17. The main body of Section 11AC lays down the conditions and circumstances that would attract penalty and the var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal is justified in reducing the penalty to 25% of the duty leviable on the respondent. All these aspects of the main question are already considered by this Court in its order dated 18- 11-2009 in the case of Messers Exotic Associates v. Commissioner of Central Excise (Tax Appeal No. 572 of 2007 with Tax Appeal No. 869 of 2007 [2010 (252) E.L.T. 49 (Guj.)] and Tax Appeal No. 1942 of 2008, in the case of Commissioner of Central Excise Customs v. Rama Synsilk Mills P. Ltd., decided on 21-1-2010 [2010 (254) E.L.T. 277 (Guj.)]. This Court after considering the decision of Commissioner of Central Excise v. Malbro Appliances, 2007 (79) RLT 109 (Delhi), Union of India v. Dharamendra Textiles, 2008 (231) E.L.T. 3 (S.C.), Union of India v. Rajasthan Spinning Weaving Mills, 2009 (238) E.L.T. 3 (S.C.), K. P. Pouches (P) Ltd. v. Union of India, 2008 (228) E.L.T. 31 (Delhi), Commissioner of Central Excise, Rohtak v. J.R. Fabrics Pvt. Ltd., 2009 (238) E.L.T. 209, has taken the view that the order passed by the Tribunal retaining the penalty of 25% of the duty amount seems to be quite justified. For the reasons recorded in the said two judgments, we do not feel it necessary to take any di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, the adjudicating authority may send a communication to the respondent-assessee indicating therein that the particular amount of interest and/or 25% of the penalty of the duty amount is not paid by the respondent assessee and hence if the assessee wants to avail the benefit of the reduced penalty of 25%, such amount of interest and/or penalty of 25% should be paid within 30 days from the date of receipt of such communication, failing which they would be liable to pay penalty under Section 11AC equivalent to the amount of duty. 8.3 Hon ble Madras High Court has in case of A P Steels [2017 (355) ELT 6 (Mad)] held as follows: 5.5 The way, we look at the issue raised before us, has, in our view, got nothing to do with Section 2(b), or Section 12E of the 1944 Act. What is required to be considered, in our opinion, is whether the appellate proceedings can be considered as a continuation of the original proceedings? And therefore, would the Appellate Authority have the same powers, as the Original Authority? In our view, the answer has to be that, if, the original proceedings are challenged in appeal, the order of the Original Authority is in jeopardy, till such time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the judgement of the Bombay High Court in : Commissioner of Central Excise and Customs, Aurangabad v. V.V. Patil S.S.K. Limited, 2007 (215) E.L.T. 23 (Bom.) was misdirected. According to us, the Tribunal has completely misunderstood the ratio of the judgement. This was a case, in which, the Bombay High Court held that there was no discretion vested in the Authorities to reduce the penalty below the minimum prescribed under the Act. The Court was not called upon to deal with the issue, that we have been called upon to decide. According to us, the judgement is completely distinguishable from the facts obtaining in the present case. 6.1 An apposite judgement, in our view, would be the judgement of the Division Bench of the Delhi High Court in K.P. Pouchers (P) Ltd. v. Union of India, 2008 (228) E.L.T. 31 (Del). In this, none of the statutory authorities had given an option to the Assessee to pay duty at a scaled down amount in terms of the first proviso to Section 11AC. In the background of these broad facts, the Court made the observations : We are of the opinion that Section 11AC of the Act and its ..... 17. two provisions have to be given a meaningful interpreta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y challenged the imposition, it cannot be said that the Assessee had no intention of paying the penalty within time and saddle itself with an avoidable liability. On the contrary, it could easily be assumed (given the conduct of the Assessee) that if the correct penalty has been imposed, the Assessee would have paid it during the time prescribed. Since the statutory authorities have themselves acted illegally 23. and contrary to the first proviso to Section 11AC, the Assessee cannot be faulted for challenging the order passed by the Assistant Commissioner. Unfortunately, the error committed by the Assistant Commissioner was repeated by the Commissioner (Appeals) as well as by the Tribunal. Consequently, the failure of the Assessee to pay the penalty 24. amount within 30 days of the adjudication order cannot be held against the Assessee on the facts of the present case. (emphasis is ours) 6.2 As would be evident from the observations extracted above from the judgement of the Delhi High Court in K.P. Pouchers case, the Court seems to have gone further, by observing that it is incumbent on the part of the statutory authorities to bring to the notice of the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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