TMI Blog2002 (7) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... 250/- under Section 11AC of the Act for the various contravention alleged. 2.The appellants are an Undertaking wholly owned by the Government of Tamil Nadu. They are engaged in the manufacture inter alia of Railway wagons falling under Chapter Headings 8605.50 and 8428.00 of the CETA, 1985. It was found on verification of their accounts that the appellants have entered into a contract with the Southern Railways for the manufacture and supply of 106 wagons of BTPGLN wagons vide contract No. 94/PS/PF EC/954/3, dated 1-12-94 for an amount of Rs. 16,10,90,974/- which is inclusive of cost of steel at Rs. 6,65,833 per wagon. The cost of each wagon including the cost of steel worked out to Rs. 15,29,724 (6,55,833 + 8,63,891). The Railways have given free supply of raw materials worth Rs. 7 lakhs per wagon. The appellants have paid Central Excise duty @ 15% ad valorem and have cleared 21 wagons to their customer till 16-7-1998. It was also noticed that the appellants have adjusted value mentioned in the invoices against 50% of the advance amount received from their customers. They have also collected an amount of Rs. 2400/- per wagon by way of inspection charges. This amount was not inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n it was held that the price was a contracted price between the buyer and the seller and that has no relevance to the advance taken. (b) It is not for the Revenue to see as to how the advance received has been used and what is to be seen is whether because of the advance taken, there was any lowering of the price and 50% of the price taken as advance cannot be taken to be abnormally high. (c) The appellants are an undertaking wholly owned by the Govt. of Tamil Nadu and the buyer is the Indian Railways and hence there cannot be any motive to depress the price. (d) Longer period of limitation cannot be invoked in this case in view of the decisions in the case of Tamil Nadu Housing Board [1994 (74) E.L.T. 0009 (S.C.) = 1994 (55) ECR 7 (S.C.)] and various other decisions such as CCE v. Chemphar Drugs [1989 (40) E.L.T. 276 (S.C.)], Padmini Products v. CCE, Bangalore [1989 (43) E.L.T. 195 (S.C.) = 1989 (25) ECR 289 (S.C.)] and in the case of Pushpam Pharmaceuticals v. CCE, Bombay reported in 1995 (78) E.L.T. 401 (S.C.). (e) The testing charges paid to the IDPL cannot be included in the assessable value for the reason that the inspection fee was paid by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advances received are includible in the assessable value. He also referred to the conclusion arrived at by the Commissioner in regard to retention of the duty paid goods, collection of inspection charges and invocation of longer period of limitation. He submitted that in view of the well reasoned order passed by the Commissioner, the appeal should be dismissed. 6.We have carefully considered the submissions made before us by both the sides and gone through the case records including the contract as amended vide Govt. of India, Ministry of Railway, New Delhi letter dated 8-3-1996 which is available on page No. 82 of the paper book. We find that the contract sets out various conditions including liability of payment of excise duty, and Sales Tax, etc. According to the terms of the Contract, Central Excise duty and Sales tax statutorily leviable shall be reimbursed by the purchaser, viz., Railways on production of documentary evidence. This contract was not made known to the department. We find that the period involved in this case is 1995-96 to 1998-99 and the show cause notice invoking the longer period of limitation was issued on 28-9-98. We find that the issues that arise for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have received huge amount of advance from their Customer and they have utilized the same for their working capital and repayment of loan. In the present case before us, it is on record that the appellants have adjusted the value mentioned in the invoice against 50% of the advance amount received from the Railways. Therefore it can be logically concluded that they have saved huge amount by way of interest. Therefore, we are of the considered opinion that the interest on advance is includible in the assessable value and longer period of limitation in term of the proviso to Section 11A(1) has been correctly invoked in this case as the appellants have held back information with regard to the contract entered into by them with the Railways. Coming to the second charge that the appellants have collected inspection charges from the Railways, we find that this issue is covered by the decision of the Tribunal in the case of Hindustan Gas Industries Ltd. reported in 2001 (133) E.L.T. 481 wherein it was held that as far as the appellant is concerned, it recovers, in every case, the charges for inspection from its buyers, the railways or the sleeper manufacturers. The costs incurred for su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the buyer is the Indian Railways and they have supplied the goods in accordance with a contract though the appellants had not brought to the notice of the department the existence of a contract. Therefore, we are inclined to think that interests of justice would be served if the penalty is reduced to Rs. 1,20,000/- (Rupees One lakh twenty thousand) and we order accordingly. As regards penalty under Section 11AC is concerned, in view of the fact that the appellants happen to be a Govt. of Tamil Nadu Undertaking and the Buyer of the goods was Indian Railways as well as N.L.C. which is a Govt. of India Undertaking, we feel that there is a need for reduction in the quantum of penalty. We also find that the Tribunal in the case of Escorts JCB Ltd. v. CCE, New Delhi reported in 2000 (118) E.L.T. 650 had reduced penalty imposed under Section 11AC from Rs. 30,63,751/- to Rs. 10,00,000/-. While doing so, the Tribunal held that the limit of penalty equal to duty under Section 11AC is the maximum limit and it is not mandatory that in all cases such maximum should be imposed as penalty and authority is having discretion to impose lower penalty. Therefore, we are inclined to think that int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akshmi Engg. 2000 (37) RLT 270 11.With regard to inspection charges, the appellants contend that Railway Board nowhere specifies that the cost of addition of third party inspection would have to be paid by the wagon manufacturer. They stated that any third party inspection carried out at the instance of the buyer in addition to the normal inspection of the assessee is not includibile to the assessable value as per the erstwhile Section 4 of the Act. In this regard the following judgments have been relied by the appellants :- (a) L T v. CCE - 1998 (101) E.L.T. 668 (T) (b) CCE v. Shama Engine Valves Ltd. - 2000 (119) E.L.T. 508 (T) (c) CCE v. Simco Engg. Ltd. - 1997 (92) E.L.T. 699 (T). 12.With regard to invocation of larger period, they contended that department had full knowledge of the advances as there was an earlier Order-in-Original No. 71/96, dated 15-10-97 passed by the AC wherein he had held that advance received by the appellants from various customers including NLC and Railways had no nexus with the contract value as the contracts had been scrutinized by the department and matter has been dropped. 13.Ld. SDR relied on the findings given by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ratio does not touch upon the aspect pertaining to the information already available with the department to allege suppression of facts. The same is distinguished. Appellant succeeds even on the ground of time bar. Thus the appeal is allowed in the above terms. Sd/- (S.L. Peeran) Member (J) POINTS OF DIFFERENCE 19.In view of difference of opinion between the Members, the following question is referred to Third Member for determining the same as under :- "Whether the appeal is required to be rejected in terms of the findings recorded by learned Member (T) Shri Jeet Ram Kait by ordering that the penalty imposed under Rule 173Q is required to be reduced to Rs. 1,20,000/- and penalty imposed under Section 11AC is required to be reduced to Rs. 11,50,000/-" OR "The appeal is required to be allowed both on merits and on time bar in the light of judgments noted by Member (Judicial) Shri S.L. Peeran in his order." Sd/- (Jeet Ram Kait) Member (T) Sd/- (S.L. Peeran) Member (J) 20.[Order per : C.N.B. Nair, Member (T)]. - The duty demand on the BTPGLN wagons in the present case is on account of the appellant receiving certain advances from Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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