TMI Blog2008 (11) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-2008 - Ms. Jyoti Balasundaram, Vice-President and Shri A.K. Srivastava, Member (T) Shri T. Gunashekaran, Advocate, for the Appellant. Shri N.A. Sayed, JDR, for the Respondent. [Order per : A.K. Srivastava, Member (T)].- These appeals have been filed by M/s. RDC Concrete (I) Ltd. and Shri Sanjay Bahadur, their Managing Director against the Order-in-Original dated 28-2-2006 read with corrigendum dated 1-5-2006 passed by the Commissioner of Central Excise, Belapur. The Commissioner, vide the impugned order read with corrigendum, confirmed the Central Excise duty of Rs. 1,25,51,943/- together with interest; imposed equivalent penalty of Rs. 1,25,51,943/- under Section 11AC of the Central Excise Act, 1944; imposed penalty of Rs. 25,00,000/- under the Rule 25 of the Central Excise Rules, 2002 and; imposed penalty of Rs. 5,00,000/- on Shri Sanjay Bahadur under Rule 26 ibid. 2. Heard both the sides and perused the records. 3. The Appellants, M/s. RDC Concrete Ltd. (formerly known as Unitech Prefab Ltd., in short UPL) are engaged in the manufacture of excisable goods i.e. 'Unipaved Interlocking Concrete Blocks' (payers) of various sizes falling under chapter 68 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is on account of post - removal expenses like transportation, unloading and stacking, laying and paving blocks in position on the sand bed prepared at the site, filing the joints by joining and thereafter compacting the blocks by plate vibrator has been granted and duty on the additional consideration of Rs. 295.50 (Rs. 826.50 - Rs. 531/-) has been demanded, which works out to Rs. 34,62,462/-) * On scrutiny of the report submitted by the Asst. Director (Cost), it was noticed that costing of each element assessed by the Appellants was on a substantially lower side. Therefore, the differential duty owing to the difference in the costing of each elements of the value of the finished goods 'payers' supplied by UPL to all its customers was worked out and computed. Differential duty en this count for the period from 1999-2000 to 2003-04 is Rs. 90,89,480.56. The appellants were served the show cause notice dated 4-7-2005, which culminated in the impugned order as referred to above. 4. The Commissioner confirmed the demand and imposed penalty by holding as follows: (i) By virtue of the fact that the one director of UTL becomes the man aging director of Appellants undoubtedly es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry and one company is holding, they cannot be called as related person unless there is mutuality of interest. In support of above contention, they relied on the following case laws. (i) India Thermit Corp. Ltd. v. CCE, New Delhi - 2003 (151) E.L.T. 412 (Tri.) (ii) Godrej Industries Ltd. v. CCE, Mum-II - 2004 (175) E.L.T. 261 (Tri.) (iii) CCE, Mumbai-III v. M/s Ralliwolf Ltd. -1998 (100) E.L.T. 528 (Tri.) 6. We find that the various case laws relied upon by the appellants relate to the period prior to 1-7-2000 i.e., prior to the coming into force of the new Section 4 of the Central Excise Act, 1944 by Section 94 of the Finance Act, 2000 read with Central Excise Valuation (Determination of Excisable Goods) Rules, 2000. Hence, these case laws cannot ispo facto be applied to the facts of the present case so far as it relates to the period after 1-7-2000. According to the Section as amended Section 4(3)(b), persons shall be deemed to be "related" if - (i) they are inter-connected undertakings, (ii) they are relatives, (iii) amongst them the buyer is a relative and a distributor of the assessee, or a sub-distributor of such distributor, or (iv) they are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants and UTL have interest in the business of each other. 7. However, after having held UPL and UTL as related persons, we note that Rule 10 of the Central Excise Valuation Rules, 2000 can be invoked only when the entire production of the goods by a manufacturer is sold to or through an inter-connected undertaking. For better understanding, we reproduce below Rule 10 ibid "When the assessee so arranges that the excisable goods are not sold by him except to or through an inter-connected undertaking, the value of goods shall be determined in the following manner namely:- (a) If the undertakings are so connected that they are also related in terms of sub-clause (ii) or (iii) or (iv) of clause (b) of sub-section (3) of Section 4 of the Act or the buyer is a holding company or subsidiary company of the assessee, then the value shall be determined in the manner prescribed in Rule 9. Explanation. - In this clause "holding company" and "subsidiary company" shall have the same meanings as in the Companies Act, 1956 (1 of 1956)." In the case of the appellants, we find that they have not only supplied the goods against the order received from UTL but also executed the orders r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sold exclusively to or through related persons. It is not in dispute that such a case does not exist here. Therefore, taking resort to that provision was not justified." Following the ratio of the above case law, we hold that the demand of duty of Rs. 34,62,462.86 is not sustainable and accordingly we set aside the same together with interest and equivalent penalty. 8. As regards the objections raised by the appellants for engaging the services of the Asstt. Director (Cost) to go into the costing aspect of the goods manufactured by them for the impugned period, we find the same are frivolous. The Asstt. Director (Cost) is an employee of the Department. He is cost accountant by profession. The Department is at liberty to requisition his services in case of doubt about the valuation of the goods manufactured by the assessee. The appellants have not questioned the report of the Asstt. Director (Cost) on merits. There is not even a whisper or remote allegation that the report of the Asstt. Director (Cost) is biased or prejudiced or given with ulterior motive. The ratio of the case law Bausch and Lomb (India) Ltd. v. CCE, Jaipur reported in 2004 (177) E.L.T. 1081 (Tri.-Del.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... servation/objection was made with respective valuation of goods removed since all the clearances were strictly based on the purchase orders received from the customers and that there is no suppression of facts, wilful mis-statement, fraud etc. with intent to evade payment of duty so as to invoke extended period of five years in terms of the proviso to Section 11A(1) of the Central Excise Act, 1944. In this connection, they relied upon the following case laws: (i) Tamil Nadu Housing Board v. CCE reported in 1994 (74) E.L.T. 9 (S.C.) (ii) Cosmic Dye Chem v. CCE reported in 1995 (75) E.L.T. 721 (S.C.) (iii) Padmini Products v. Collector reported in 1989 (43) E.L.T. 195 (S.C.) We, however, find that the investigations and documentary evidences have unequivocally established that UPL have suppressed the true assessable value with intent to evade payment of duty. The ratio of the above case laws cannot be applied to the facts of the present case. Hence the extended period of five years is rightly invokable in this case. 11. The appellants have contended that once the Commissioner has passed the order dated 28-2-2006, he has become functus officio and is not compet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, he omitted to mention the amount of Rs. 1,25,51,943/- which was equivalent to the duty confirmed. This he did subsequently by way of corrigendum dated 1-5-2006. Further, the Commissioner held in the order dated 28-2-2006 that Shri Sanjay Bahadur, Managing Director of UPL and Director of UTL is liable to penal action as proposed in the notice as the omissions and Commissions he did resulted in huge revenue loss. However, due to oversight he did not impose penalty in the order portion, which he did subsequently by corrigendum dated 1-5-2006 by imposing penalty of Rs. 5,00,000/- on him under Rule 26 of the Central Excise Rules, 2002. We are of the view that the unintended mistakes, which crept in the order were only rectified by the Commissioner by issue of corrigendum. He only filled up the gap in the order and regularized the matter. The Order did not warrant review on account of these infirmities. The corrigendum has not changed or altered the complexion of the order. 13. We uphold the demand of duty of Rs. 90,89,480.56 together with interest and equivalent penalty of Rs. 90,89,480.56 on the appellants. We set aside the penalty of Rs. 25,00,000/- imposed on the appellants un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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