TaxTMI 
TaxTMI 
TaxTMI 
2010 (3) TMI 18
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....rtue of amendment made in the Finance Act, 2005. 2. On the intelligence gathered that the appellant/assessee are manufacturing and clearing the product 'dough', without payment of duty, to their franchisee/outlets, their unit was visited by the officers of the Central Excise Department on 19.1.2006 and the preliminary scrutiny of the records collected by the Department showed that the assessee are maintaining separate sets of invoices for different customers and no assessable value or duty payment particulars were mentioned in the invoices but only invoices for clearances made to M/s.Britannia Industries have been properly invoiced, showing the Excise Duty. Therefore, with further intelligence, the factory-cum-registered office of the assessee was surprised by the officers attached to the Divisional Preventive, Chennai-II Division on 21.1.2006 and two computer systems along with certain records were recovered from the assessee under mahazar and the assessee's own outlet at Spencer's Plaza, Mount road, Chennai was also surprised on the same day by the officials and certain records were also recovered from there, under mahazar. 3. According to the Revenue, the assessee is manufactu....
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....h, 2005 to December, 2005 to their various franchisees and their outlets. 5. The further case of the Revenue is that the assesseee has availed CENVAT Credit from April, 2005 onwards for the inputs and packing materials used for packing of their final products viz. 'Cookies'; that the scrutiny of the records of the assessee has revealed that during the period from 1.4.2005 to 28.2.2006, the assessee has cleared various CENVAT availed packaging materials without expunging the credits involved thereon amounting to Rs.3,17,323/-. 6. The further case of the Revenue is that the assessee has cleared their final products viz. 'Cookies' to M/s.Taj Group of Hotels; M/s.GRT Grand Hotels, M/s.Jet Airways etc. in bulk based on specific contract with each of the parties; that these institutional customers are not selling these cookies, but are supplying the same to their customers free for consumption; that the assessee knowing very well that these goods were sold in bulk, and are not meant for retail sale and also no Maximum Retail Price (MRP) was mentioned on the packages and thus are not covered under Section 4-A of the Central Excise Act, 1944, but, in order to avail the benefit of 35% aba....
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....Revenue has filed W.P.No.11028 of 2007 before this Court and as the learned single Judge of this Court has allowed the said writ petition, thereby setting aside the order passed by the second respondent Commission, the assessee has come forward to prefer this writ appeal. 10. Heard Mr.Aravind P.Duttar, learned senior counsel appearing for the appellant and Mr.K.Ravichandra Babu, learned Senior Central Government Standing Counsel appearing for the first respondent/Revenue. 11. Since the assessee has already paid the duty regarding the dough clearance, as has been claimed by the Revenue in the show-cause notice, the issue that has now been required to be decided by us is regarding the levy of duty payable on the wholesale price of cookies and whether the assessee is eligible to avail the benefits under Section 4-A of the Central Excise Act. 12. As has already been observed supra, the assessee, on receipt of the show-cause notice, instead of submitting his explanation to the same, has straight away approached the second respondent Commission, which has been found fault with by the Revenue. 13. Section 32-E of the Central Excise Act deals with 'Application for settlement of cases'.....
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....e the Central Excise Officer. But, it nowhere provides that the assessee could approach the Settlement Commission, regarding a disputed question, particularly regarding a disputed question of fact and law as to the applicability of a provision of law, like the one in hand wherein the issue centres around the applicability of whether Section 4 or Section 4-A of the Central Excise Act. Though the assessee has admitted the short levy on dough and paid the duty thereof, since he is raking up the plea that he is eligible to claim benefits under Section 4-A of the Central Excise Act instead of Section 4, that point goes out of the jurisdiction of the Settlement Commission, since it has not been vested with the power to decide such a question of direct assessment. By such an act, the Settlement Commission has usurped the jurisdiction of the adjudicating authorities and as has been rightly commented on the part of the Revenue, by the impugned order, the Settlement Commission has set a bad precedent. 15. Even if it is presumed, without accepting, that the Settlement Commission has been vested with such powers, a prescribed procedure has been mandated under Section 32-F of the Central....
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....nt reasons to pay the amount referred to in sub-section (3), within the time specified in that sub-section, it may extend the time for payment of the amount which remains unpaid or allow payment thereof by instalments, if the assessee furnishes adequate security for the payment thereof. (5) Where the additional amount of duty referred to in sub-section (3) is not paid by the assessee within the time specified or extended period, as the case may be, the Settlement Commission may direct that the amount which remains unpaid, together with simple interest at the rate of eighteen per cent per annum or at the rate notified by the Central Board of Excise and Customs from time to time on the amount remaining unpaid, be recovered, as the sum due to Central Government by the Central Excise Officer having jurisdiction over the assessee in accordance with the provisions of Section 11. (6) Where an application is allowed to be proceeded with under sub-section (1), the Settlement Commission may call for the relevant records from the Commissioner of Central Excise having jurisdiction and after examination of such records, if the Settlement Commission is of the opinion that any further inquiry o....
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.... the amount remaining unpaid from the date of expiry of the period of thirty days aforesaid. (11) Where a settlement becomes void as provided under sub-section (9) the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed to be proceeded with by the Settlement Commission and the Central Excise Officer having jurisdiction may, notwithstanding anything contained in any other provision of this Act, complete such proceedings at any time before the expiry of two years from the date of the receipt of communication that the settlement became void." 16. Thus, a specific procedure to be followed by the Settlement Commission has been contemplated under this Section, upon receiving an application under Section 32E(1) of the Act. From the materials placed on record it is seen that to the application dated 25.9.2006 filed by the assessee, the first respondent/Department has forwarded their para-wise remarks on 30.10.2006, wherein in para No.8, the Revenue has submitted as follows: "It appears that the assessee is making the valuation aspect of the issue only to score ineligible leverage and a....
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....rinciple is that by erroneously assuming existence of such jurisdictional fact, no authority can confer upon itself jurisdiction which it otherwise does not possess. It was further observed: 76. The existence of jurisdictional fact is thus sine qua non or condition precedent for the exercise of power by a court of limited jurisdiction. Drawing the distinction between jurisdictional fact and adjudicatory fact, the Honourable Apex Court has held in the above judgment as follows: 84. It is clear that existence of jurisdictional fact is sine qua non for the exercise of power. If the jurisdictional fact exists, the authority can proceed with the case and take an appropriate decision in accordance with law. Once the authority has jurisdiction in the matter on existence of jurisdictional fact, it can decide the fact in issue or adjudicatory fact. A wrong decision on fact in issue or on adjudicatory fact would not make the decision of the authority without jurisdiction or vulnerable provided essential or fundamental fact as to existence of jurisdiction is present. 20. This principle was reiterated in Carona Ltd. v. Parvathy Swaminathan & Sons [(2007) 8 SCC 559] and in Ramesh Chandr....
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....iable to pay the duty of excise under this Act and includes his agent; (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 so associated that they have interest, directly or indirectly, in the business of each other. Explanation. In this clause (i) inter-connected undertakings shall have the meaning assigned to it in clause (g) of Section 2 of the Monopolies and Restrictive Trade Practices Act, 1969 (64 of 1969); and (ii) relative shall have the meaning assigned to it in clause (41) of Section 2 of the Companies Act, 1956 (1 of 1956); (c) place of removal means (i) a factory or any other place or premises of production or manufacture of the excisable goods; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty; (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory, from where such goods ....
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....der the provisions of the Act, rules or other law as referred to in sub-section (1); or (b) tampers with, obliterates or alters the retail sale price declared on the package of such goods after their removal from the place of manufacture, then, such goods shall be liable to confiscation and the retail sale price of such goods shall be ascertained in the prescribed manner and such price shall be deemed to be the retail sale price for the purposes of this section. Explanation 1.For the purposes of this section, retail sale price means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole consideration for such sale: Provided that in case the provisions of the Act, rules or other law as referred to in sub-section (1) require to declare on the package, the retail sale price excluding any taxes, local or otherwise, the retail sale price shall be construed accordingly. Explanation 2.For the purposes of this section, (a) where on ....
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....eaning of the Motor Vehicles Act, 1939 (4 of 1939), is undertaken; (iii) any package containing a commodity of net content of 5 kilograms, or 5 litres or less and displayed for sale at the retail outlet; (iv) any package containing a commodity to be sold by number or length and displayed for sale at the retail outlet;" 25. From the materials placed on record it is seen that the assessee is supplying their final product 'Cookies' to their institutional customers like M/s.Taj Group of Hotels, M/s.GRT Grand Hotels, M/s.Jet Airways etc. in bulk, on specific contracts entered into by them. Admittedly, these institutional customers are not selling these cookies but are supplying it to their customers free of cost. One of such institutional customers of the assessee namely M/s.Taj Coramandel, Chennai, by their letter dated 19.4.2006 addressed to the first respondent has stated that "on the packaging a standard label containing the 'date of Manufacture, Best before 60 days, product name, batch no., net wt. Manufctured by' alone are printed and that there is no mention of MRP or any other price on the packaging or the label since the products are supplied on the basis of Purchase Orders ....
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.... at all obliged to do so under the Weights and Measures (Packaged Commodities Rules) 1977, exhibited before us, does not in any way absolve them of the liability already cast on them during the relevant time. 30. The learned senior counsel appearing for the appellant has relied on a judgment of the Honourable Apex Court in JAYANTHI FOOD PROCESSING (P) LTD. vs. COMMISSIONER OF CENTRAL EXCISE, RAJASTHAN [(2007) 8 SCC 34], wherein the Honourable Apex Court has has held as follows: "The following would be the factors to include the goods in Section 4-A(1) & (2) of the Act: (i)The goods should be excisable goods; (ii)They should be such as are sold in a package; (iii)There should be requirement in the SWM Act or the Rules mad thereunder or any other law to declare the price of such goods relating to their retail price on the package; (iv)The Central Government must have specified such goods by notifiction in the Official Gazette; (v)The valuation of such goods would be as per the declared retail sale price on the packages less the amount of abatement. If all the said factors are applicable to any goods, then alone the valuation of the goods and the assessment of duty would be u....
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....ion No.14/2008, dated 1.3.2008 does specify, at Serial Number 12, 'biscuits' allowing abatement of 35% and since the said Notification still holds the field, the Department has to extend the benefit of the same to the appellant. But, it is to be pointed out that this Notification has been issued on 1.3.2008, well after the period during which the issue on hand arose i.e. prior to the year 2006. Notably, no retrospective operation of this Notification has been given and therefore, the benefits of this notification dated 1.3.2008 cannot be given retrospective effect to the case of the appellant, which involved the happened before and during the year 2006. When no retrospective operation has been given to this Notification, it is common knowledge that only the law prevailing at the time of occurrence should be made applicable to the case. Therefore, the above judgment of the Honourable Apex Court in Whirlpool's case also has no application to the facts of the case. 34. Our above discussion, would lead to the following conclusions that (i)the second respondent/Commission has usurped the jurisdiction of the adjudicating authorities and has passed the order of granting abatement tot h....