TMI Blog2023 (11) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... 09 (5) TMI 15 - SUPREME COURT] . Accordingly, the penalty is imposed under Section 11AC are set aside. The appellant have themselves on the basis of their own assessment, paid the duty, which might have been available as credit to the OEM manufacturers. Accordingly, the merits of the duty already paid and confirmed by the impugned order, not dealt upon. In the show cause notice was not to be issued in the present case - In case of M/S. STEEL AUTHORITY OF INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [ 2019 (5) TMI 657 - SUPREME COURT] a three judges bench of Hon ble Supreme Court observed The assessee volunteered and made payment in October 2006. We find merit in the finding by the authority that this is a case where therefore the payment made by the assessee is to be treated as one falling under Section 11A(2)(b). This meant also that there was no need for determination of the duty within the meaning of Section 11A(2)(a) or issuance of notice under Section 11A. Following the decision, no penalty proceedings in terms of Section 11AC could have been initiated against the appellant and the same needs to be set aside. Appeal allowed in part. - MR. P.K. CHOUD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearances of 'Heat-exchanger', as mentioned hereinabove, should not be confirmed against them under proviso to Section-11A(1) of the Central Excise Act, 1944 and amount of Rs.1,21,11,757/- (Rupees One Crore twenty Lakhs eleven Thousand seven Hundred and fifty seven only), already deposited by them should not be appropriated and adjusted against the proposed demand. (ii) Interest of Rs.9,95,669/- (Rupees Nine Lakhs ninety five thousands six hundred and sixty nine Only) as leviable on the above duty amount of Rs. 1,21,11,757/- should not be charged under Section 11-AB of the Central Excise Act, 1944 and why amount of Rs. 9,95,669/- (Rupees Nine Lakhs Ninety Five Thousands Six Hundred And Sixty Nine Only), already deposited by them towards aforesaid interest liability, should not be appropriated and adjusted against the proposed demand for interest. (iii) Penalty under Rule-25 of the Central Excise Rules, 2002, read with Section-11AC of the Central Excise Act, 1944 should not be imposed upon them for alleged short payment of aforesaid duty, as mentioned hereinabove, in contravention of the provisions of erstwhile Rules 6,8 of the Central Excise Rules, 2002 and Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho upheld the order of Additional Commissioner vide impugned order referred in para-1 above. 3.1 We have heard Shri Atul Gupta, learned Counsel for the appellant and Shri Manish Raj learned Authorised Representative appearing for the respondent. 3.2 Arguing for the appellant learned Counsel submits that- Central Excise duty has been correctly discharged on transaction value in terms of Section 4 of Central Excise Act. In similar situation, in case of CCE, Mumbai-I Vs Colgate Palmolive India Ltd. 2011 (271) ELT 293 (Tri.-Mumbai) it was held that supplier of raw material to the contractor manufacturers cannot be held as related person merely because whole of the goods manufactured by contract manufacturers was bought by the supplier of raw material. In the case of UOI Vs Atic Industries Ltd. 1948 (17) ELT 323 (SC) Hon ble Supreme Court has held that while interpreted the related person in terms of provisions of Central Excise Act as they existed then held that to attract applicability of this concern. It is essential that assessee and the person alleged to be related must have direct or indirect in the business ewes each other this judgment has been followed by the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5/01/2014, such investigation is not called for. Infact Board has categorically clarified that in such cases extended period could not been invoked. As the provisions for which extended period could have been invoked, is not applicable in the present case, there is no reason for imposition of penalties under Section 11AC. Further, as appellant has deposited the entire duty the show cause notice should not have been issued. 3.3 Arguing for Revenue Learned Authorised Representative placed reliance upon the decision of Fiat India Pvt. Ltd. and reiterates the findings recorded in the impugned order. 4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument: 4.2 For holding against the appellant Commissioner has in his order observed as follows:- 4.2 The appellant have contended that as per Section 4(1)(a) the following conditions should be satisfied: (a) There should be sale of excisable goods. (b) The assessee and buyer are not related. (c) Price is the sole consideration If all the conditions are satisfied then value of the excisable goods shall be the transaction value, otherwise the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e final product back from the vendors would tantamount to extra consideration. Therefore, the findings of the adjudicating authority that the transactions were not on 'Principle to Principle' basis is sustainable. I find that unless there is mutuality of interest in the business of each other, no one will sell the good at lower cost even lesser than the manufacturing cost. This simply goes to establish that the appellant and the OEM vendors are related. Thus Section 4(1)(a) of the Act will not apply in facts of the case. In this regard. I find force from the Hon'ble Apex Court judgment in the case of CCE, Mumbai v Fiat India Pvt Ltd [2012 (283) ELT 161(SC)] which laid down the law on valuation in the cases where goods are sold below the manufacturing costs as under: 43. What can be construed from the plain reading of Section 4 of the Act and the interpretation that is given by this Court on the expression 'normal value' is, where excise duty is chargeable on any excisable goods with reference to value, such value shall be deemed to be the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then that should represent the wholesale cash price under Section 4(1)(a) of the Act. This is the price which has been charged by the manufacturer from the wholesale purchaser or sole distributor. What has to be seen is that the sale made at arms length and in the usual course of business, if it is not made at arms length or in the usual course of business, then that will not be real value of the goods. The value to be adopted for the purpose of assessment to duty is not the price at which the manufacturer actually sells the goods at his sale depots or the price at which goods are sold by the dealers to the customers, but a fictional price contemplated by the section--------------. 4.5 In view of the above, it is, clear that for determination of the assessable value of 'Heat Exchangers for the purpose of assessment of duty. Section 4(1)(b) is the proper Section. I find that in case of sale to related person. Rule 9 of Central Excise valuation (Determination of price of excisable goods) Rules, 2000 will apply. The proviso to Rule 9 stipulates that in cases where related person does not sell the goods but uses or consumes such goods in the production or manufacture of articl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and the party themselves paid the differential duty alongwith the interest. All the exercise simply points towards the fact that the transaction value on which the goods were originally cleared to their OEM vendors was undervalued which they accepted by depositing the differential duty alongwith the interest. The intention suppression exists since in the whole exercise they were ultimate gainers as the final product manufactured by using the Heat Exchangers namely Samsung Brand Air Conditioners are purchased back by the party only. 4.3 In the present case the relevant chronology of events during the issuance of show cause notice is as follows:- Date Particular 10.12.2005 January, 06 After setting up of a new manufacturing facility, commenced production on 10.12.2005 and made first clearance of Heat Exchanger [used in manufacture of Air-conditioner] to the manufacturers, who manufacture Samsung brand air-conditioners for the Appellant only. As the actual cost of production was not known, so standard cost of production plus 10% was agreed for valuation of the goods with the OEM s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opriated against the duty amount confirmed against the appellant. 4.5 All these amounts were paid much before the issuance of show cause notice i.e. on 28.03.2007 and 31.05.2007 whereas show cause notice was issued on 26.06.2008. In terms of Section 11A(2B) of Central Excise Act, 1944 reproduced below this notice should not have been issued at all, as the appellant had already deposited the duty along with interest to the exchequer. Section 11A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded (1) ...... (2) ........ (2A) ....... (2B) Where any duty or excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person, chargeable with the duty, may pay the amount of duty before service of notice on him under subsection (1) in respect of the duty, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the duty so paid: The only purpose of this show cause notice, it seems, was for invoking the provisions of Section 11AC of the Central Excise Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AC are set aside. 4.7 We also observe that the appellant have themselves on the basis of their own assessment, paid the duty, which might have been available as credit to the OEM manufacturers. Accordingly, we do not go into merits of the duty already paid and confirmed by the impugned order. In our view show cause notice was not to be issued in the present case. In case of Steel Authority of India Limited [2019 (366) E.L.T. 769 (S.C.)] a three judges bench of Hon ble Supreme Court observed as follows: 53. As we have already noted, SAIL has paid the differential duty of Rs. 142.78 crores even without waiting for any notice under Section 11A(1). The assessee volunteered and made payment in October 2006. We find merit in the finding by the authority that this is a case where therefore the payment made by the assessee is to be treated as one falling under Section 11A(2)(b). This meant also that there was no need for determination of the duty within the meaning of Section 11A(2)(a) or issuance of notice under Section 11A. Following the above decision in our view no penalty proceedings in terms of Section 11AC could have been initiated against the appellant and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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