DEWAS METAL SECTIONS LTD. Vs. COMMISSIONER OF C. EX.
LAWS(CE)-2015-1-114
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on January 01,2015

Dewas Metal Sections Ltd. Appellant
VERSUS
COMMISSIONER OF C. EX. Respondents




JUDGEMENT

Rakesh Kumar, J. - (1.)THE appellants are manufacturers of the angles, shapes, sections and motor vehicle parts chargeable to Central Excise duty under Chapter Headings 72, 84 & 87 of the Central Excise Tariff. They manufactured certain automobile parts for M/s. Bajaj Tempo Ltd. in terms of supply agreement with them at a specified price. However, as per the understanding between the appellant and M/s. Bajaj Tempo Ltd., in order to ensure timely supply of the products, the appellant purchased their two years requirement of the raw -material at one time and since this involved extra carrying cost of the raw -material inventory, this extra carrying cost was recovered from M/s. Bajaj Tempo Ltd. as interest on raw -material inventory under debit notes. The point of dispute is as to whether the amount charged by the appellant from M/s. Bajaj Tempo as extra carrying cost of the raw -material inventory would be includible in the assessable value of the goods. The lower authorities decided this issue against the appellant and have confirmed the duty demand of Rs. 1,54,720/ - against the appellant for the period 1 -4 -2002 to 31 -3 -2004 along with interest thereon under Section 11A(1) and imposed penalty of equal amount on them under Rule 25 of Central Excise Rules read with Section 11AC of the Act. Against this order of the Commissioner (Appeals), this appeal has been filed. Heard both the sides.
(2.)MS . Priyanka Goyal, Advocate, the ld. Counsel for the appellant pleaded that the entire raw material requirement for two years had been purchased at a time to ensure timely supply of the finished product to the customer M/s. Bajaj Tempo, that since this involved extra carrying cost of the raw -material inventory, the same has been charged from M/s. Bajaj Tempo under debit notes, that recovery of the extra inventory cost from M/s. Bajaj Tempo has not influenced supply price of the final price and the same cannot be treated as additional consideration, that the impugned order treating this amount as additional consideration and confirming duty demand on this ground is not correct, that in any case, there was no willful misstatement, suppression of fact etc. on the part of the appellant and hence there was no justification for invoking longer limitation period under provision to Section 11A(1) and hence the entire duty demand raised under SCN dated 29 -6 -2005 is time barred, that in this regard, she relies upon the Apex Court's judgment in the case of Uniworth Textile Ltd. v. CCE, Raipur reported in : 2013 (288) E.L.T. 161 (S.C.) wherein the Apex Court has held that mere non -payment of duties is not equivalent to fraud or willful misstatement or suppression of fact etc., otherwise there would be no situation for which the normal limitation period of six months would apply, that the ratio of this judgment of the Apex Court is squarely applicable to the facts of this case, that for the same reason there was no justification for imposition of equal penalty under Section 11AC and that in view of the submissions the impugned order is not correct.
Shri R.K. Grover, the ld. DR, defended the impugned order by reiterating the findings of the Commissioner (Appeals) and pleaded that extended period of limitation has been correctly invoked and penalty under Section 11AC has been correctly imposed, as the appellants, in the ER -1 returns filed by them, has never disclosed the fact of charging of extra inventory cost from their customers under the debit note, that this fact came to the notice of the Department only during audit and thus the payment of duty is on account of willful suppression of the fact by the assessee. He pleaded that the Apex Court's judgment in case of Uniworth Textiles Ltd. v. CCE, Raipur (S.C.) (supra) cited by the ld. Counsel is not applicable to the facts of this case. He, therefore, pleaded that there is no infirmity in the impugned order.

(3.)WE have considered the submissions from both the sides and perused the records. As regards the merits of the case, the point of dispute is as to whether the amount charged by the appellant from their customer M/s. Bajaj Tempo under debit notes as interest on raw -material inventory, which was the cost of carrying additional raw -material inventory to ensure timely supply of the finished product to the M/s. Bajaj Tempo, is to be included in the assessable value or not, in terms of the Apex Court's judgment in the case of Bombay Tyre International v. Union of India reported in, 1983 (14) E.L.T. 1896, the cost of carrying finished goods inventory is includible in the assessable value and no reduction of this account can be claimed by the appellant, and in our view, the ratio of this judgment of the Apex Court would be applicable to the cost of raw material inventory also. It has, therefore, to be held that the amount charged from the customers as carrying cost of the extra raw -material inventory would be includible in the assessable value.
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