TaxTMI 
TaxTMI 
2013 (7) TMI 376
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....e not included the royalty charges required to be paid by them to M/s. Castrol U.K. for technology transfer and technical assistance. The demand in all the three show cause notices was raised by invoking longer period of limitation. Said notices culminated into the impugned order passed by the adjudicating authorities confirming the differential duties and penalties. 2. As regards the first show cause notice alleging non inclusion of administrative charges, appellants have submitted that there could be no motive or intention on their part to evade duty as their entire duty paid by them was available as cenvat credit to their sister unit located at Ballabgarh. Inasmuch as the duty at Ballabgarh was being paid by that unit on the basis of MRP affixed on retail packs, all the expenses including overhead, administrative charges was part of the same. As regards the two other show cause notices dated 29.5.2006 and overhead expenses was dropped as the same was included in the first show cause notice, but confirmed on account of non inclusion of royalty amount. 3. Ld. Advocate appearing for the appellants raised the following pleas :- (i) It is submitted that in terms....
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.... duty on the lubricating oil cleared in retail packs. Therefore, there was no question of suppression of facts with the intention to evade payment of duty and hence the demand of duty by invoking larger period of limitation under first proviso to Section 11A (1) of the said Act is not sustainable at all. (iv) It is settled law as held in the following amongst other case that where there is no Revenue implication there can be no intention to evade payment of duty:- (i) Hindustan Zinc Ltd vs. CCE [2008 (232) ELT 687 (Tri.-Del.)] (ii) Engineers Combine vs. CCE [1999 (113) ELT 440] (iii) Indian Telephone Inds. vs. CCE (v) Inasmuch as the provisions of Section 11A(1) cannot be sustained, no penalty at all is imposable under the provisions of Section 11AC and/or Rule 25. (vi) The appellants may at this stage itself bring to the Tribunal's notice the fact that in each of the year i.e. 2002, 2002, 2003, 2004, 2005 and 2006, the appellants have discharged duty liability both by utilizing cenvat credit as well as through cash ....
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....ue which had been raised in the show cause notice dated 07.10.2004. 8. The differential duty demand on the bulk lubricating oil on account of non-inclusion of royalty amount in the cost of production of the bulk lubricating oil has been confirmed invoking larger period of limitation. 9. I am in full agreement with the Learned Member (Judicial) as regards the view taken that on account of revenue neutrality and in the light of various judgments cited, it cannot be said that there was an intention on the part of appellants to evade duty. Therefore extended period can not be invoked. However, In my view on the ground of revenue neutrality, the whole demand cannot be dropped and the demand relating to the period beyond one year which requires the department to establish suppression/fraud/collusion etc. only is required to be set aside. Needless to say once it is held that extended period is not applicable, penalty also cannot be levied. In my view the demand for the normal period of limitation of one year as applicable under Section-11A is required to be confirmed and the reasons for this conclusion are discussed below. 10. Before proceeding to consider application of normal p....
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....and Cost Accountant Shri R.M. Kandol (appointed on behalf of the assessee) wherein the Royalty charges were included in their cost of production and stated at note no.7 of the certificate that "Rates are in line with CAS-4 formula as per the board circular no.692/8/2003-CX Dt.13.02.2003". I find that the royalty is correctly includible in the cost of production and I also find that it is in the knowledge of the assessee that the royalty charges is to be included in the cost of production but they just want to avoid the duty liability for the period covered in the notices." 11. The cost accountant firm whose services were utilised by the appellants for preparation of CAS-4 certificate had included the royalty charges in the cost of production for the period from January to March 2006. The Circular referred to by the Commissioner issued by the Board states that CAS-4 which is cost accounting standard for determination of cost of production for capital consumption was developed by the institute of cost and works accountings of India. Therefore in the absence of any submission by the appellants of an alternative method for working out cost of production which is a better authority a....
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.... any, made by the person on whom notice has been served. 13. The above two provisions clearly show that the law recognizes the fact that there can be short levy even when there is an approval or an assessment by the Central Excise Officer and even in such cases, the Central Excise Officer is empowered to recover the amount if the notice is served within one year from the relevant date. The period of one year gets extended to five years when the short levy has arisen because of fraud, collusion or any willful mis-statement or suppression of facts with intent to evade payment of duty. In this case there is no dispute that there was no intention to evade payment of duty on the part of the appellants. Therefore the limited question that arises is whether the demand even within the limitation period of one year can be waived or can be set aside on the ground of revenue neutrality. I am unable to find any provision in the law which empowers the Tribunal to do so. None of the decisions cited by the appellants support this view. Therefore the appellants would be liable to pay the differential duty along with interest as applicable for the differential duty which arises within the limita....
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....de on the difference. Hon'ble President in his order dated 10.08.10 observed that the two Members cannot refer the entire appeal because of difference of opinion instead of making a statement referring the point or points of difference between them. He relied upon the decision of the Hon'ble Gujarat High Court in the case of Colourtech Vs. UOI reported in 2006 (198) ELT 169 (Guj.) reiterated by the Hon'ble High Court in the case of CCE & Cus. Vs. Jagat Texturising reported in 2010 (255) ELT 353 Guj. With these observations, Hon'ble President directed that the matter be returned and placed before the concerned Bench. 3. As directed by the Hon'ble President, the difference of opinion is revised as under: Difference of Opinion (i) Whether it has to be held that royalty charges in appropriate proportion relatable to production of bulk oil are to be included in the cost of production of bulk lubricating oil as held by Member (Technical), (ii) Whether differential duty paid by the appellants on being pointed out by the audit has to be appropriated as held by Member (Technical), (iii) Whether on the basis of the fact that the duty paid....
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....heir Silvassa unit to Mumbai and Ballabgarh units. It is his submission that the entire difference of opinion can be answered only on the question of limitation and draws my attention to the show cause notices dated 07.10.2004, 29.5.2006 and 26.6.2006 and submits that the demands which have been raised for the period is beyond limitation. He would submit that since all the three show cause notices are beyond the period of limitation, the question of Revenue neutrality as address by both the Members will come into play and there cannot be any difference of opinion. 4. Learned Additional Commissioner (AR) on the other hand would submit that the third member can only hear the points of difference stated by the original Bench and they cannot derive the unintended question and has no power to decide the appeal in its entirety, as the law which has been decided by the Hon'ble High Court of Gujarat in the case of Color Tex Processing vs. UOI. He would submit that the findings recorded by the Member (Technical) being on the question of facts, should be upheld by the third Member. 5. I have considered the submissions made at length and perused the record. 6. I find strong force in ....
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....o 01/2003 taking into account @ 0.87 as process overhead Rs. 61,80,82,188/- duty paid Rs. 9,88,93,150/-. Duty has been paid @ 0.87 + 15% of 0.87 = 0.87 + 0.13 = 1.00. Duty was payable @ 1.56 + 15% 1.56 = 1.56 + 0.23 = 1.79 *Difference = 1.79 - 1.00 = 0.79 Total quantity cleared to Ballabhgarh units om 11/2001 to 01/2003 = 3,65,02,958 Ltrs. DUTY PAYABLE (Short levy) = 16% of 0.79 x 3,65,02,958 = 16% of 2,88,37,337 = Rs. 46,13,974/-. Superintendent Central Excise, Range-I, Div-III, Silvassa. 8.2. On perusal of the show cause notice dated 29.5.2006, I find that in the demand has been worked out for the period 2001 to December 2004, as per the annexure 'A' to the show cause notice, which is reproduced as under:- ANNEXURE "A" TOTAL ADDITIONAL (OVERHEADS AND ROYALTY) TO BE CONSIDERED FOR CAPTIVE CONSUMPTION (A+B) Year Additional over heads as per (A) above per Ltrs. Royalty paid per Ltrs. as per (B) above Total additional over heads to be considered per Ltrs. Quantity despatched to Ballabhgarh plant Ltrs. Total additional cost of production to be considered for despatches to Ballabhgarh A B c d(b+c) e f....