TaxTMI 
TaxTMI 
2011 (10) TMI 538
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.... charging duty on each car shall be taken at Rs. 1,23,895.30 and appropriate duty shall be paid on the said cars at the time of redemption; (iii) imposed a penalty of Rs. 50,000/- under Rule 173Q(i) of the Central Excise Rules, 1944 for the offences relating to manufacture of motor vehicles without obtaining a licence and for contravention of other procedural Rules in respect of the said 15 cars and a penalty of Rs. 1,00,000/- for removing 5 cars without payment of duty thereon, on Shri Pradeep S. Jain. 3. The appellant's contention is that they had imported parts of 15 cars and had cleared the same on payment of Customs duty at the appropriate rates. They had purchased the car bodies (Chassis) of 15 Honda Cars from a public auction held by Bombay Port Trust through the auctioneers Gandhi & Co. Thereafter using the imported parts, car bodies purchased from auction and also 15 engines purchased locally, they had assembled 15 cars. These 15 cars were subsequently seized by the officers Mumbai Customs and action was initiated by the Customs and a show-cause notice dated 22-10-1986 was issued under the Customs Act, alleging that 15 Honda Cars were imported into t....
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....department cannot adopt two inconsistent stands in order to recover tax which is not due. The Customs department has held that the appellant had imported 15 complete cars in 1983 and confirmed import duty demand whereas the central excise department, on the other hand, is claiming excise duty on the assembly of cars stating that they have manufactured motor cars. Since at the relevant time, the time-limit for issuing the duty demand was six months, the show cause notices issued by the department are barred by time and, hence, the demand is not sustainable. 4. The learned DR appearing for the department submits that the demands have been correctly made. He submits that excise duty has been demanded on the assembly of cars from the parts which were imported as well as locally procured. Assembly of cars from the components parts brings into existence a new product namely, the car, which is distinct and different from the automobile parts composing it and, therefore, the activity of assembling car from the parts amounts to 'manufacture'. It is his contention that excise duty is liable to be paid whenever any manufacture is undertaken. 5. We have carefully considered the....
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....another aspect and for another purpose fall within another legislative power. There might be overlapping; but the overlapping must be in law. The same transaction may involve two or more taxable events in its different aspects. But the fact that there is overlapping does not detract from the distinctiveness of the aspects". In the instant case, the Customs duty was levied from the appellant for the import of automobile components whereas Central Excise duty is demanded for undertaking the activity of assembly of car from the imported and indigenous components/parts. Therefore, these two activities or events, namely, import of automobile parts and assembly of automobile parts into a car can be subjected to different taxes, one under the Customs Act, 1962 and the other, under the Central Excise Act, 1944. So long as the Parliament has enacted laws providing for the levy of different taxes on different activities, such levies cannot be said to be invalid or illegal. Therefore, the argument that since they have paid customs duty on the parts imported in a CKD condition as a car, they are not liable to pay excise duty on the assembly of those parts into a car has no merit and accordingl....
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....ligations, the appellant cannot turn around and say that the demand is time-barred. Ignorance of law is not an excuse in complying with the law. If legal/statutory requirements are violated, the consequences would automatically follow. In the instant case also, that is what has happened and, therefore, we hold that the plea of limitation taken by the appellant does not sustain. Accordingly, we uphold the demand of duty adjudged in the order-in-original dated 25-11-1986. 7. The appellant has not, in their appeal, made any plea or argument with regard to other issues such as valuation of cars etc. Therefore, the duty as confirmed in the order dated 25-11-1986 is upheld and the appellant is required to discharge the duty liability in accordance with the said order. However, we observe that since the appellant had discharged countervailing duty equal to the excise duty leviable on the imported parts, they might be entitled for the proforma/modvat credit of countervailing duty of Customs paid on the imported parts while discharging their excise duty liability of cars subject to the provisions of Rule 56A or 57A of the Central Excise Rules, 1944, relating to proforma/modvat credi....
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....wever, my views for confiscation of the impugned cars and thereafter imposing redemption fine and penalty upon the appellant are different, as such a separate order being recorded. 11. After going through the records and the findings of the adjudicating authority, I find that the cars have been confiscated by the adjudicating authority by observing as under :- "20. In his reply and in the hearing given before me he has attempted to make out a case that he approached the department to become familiar with the formalities of such a manufacture, all the time disputing that the activity undertaken by him does not amount to manufacture, and therefore, he should not be considered as having made any attempt to evade payment of duty. From the evidence on record and from the admitted facts one notices that he did approach the department before putting some of the vehicles produced by him into the market and, therefore, not considering the fact as to who forced him to approach the department, one may have to accept that there was no evasion or avoidance of the duty on all the vehicles manufactured by him. But one cannot help noticing that a manufacturing activity was undertak....
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....ubject to the conditions provided in Section 11AC of the Act. From the above discussion, I find that in the absence of conditions of Section 11AC of the Act i.e. fraud, collusion, wilful mis-statement, suppression of facts or violation of provisions of Acts/Rules with intent to evade duty, the confiscation is not justified. As the appellant was under the bona fide belief that the activity undertaken by him does not amount to manufacture on the advise of his Counsel as well as relying on the decision of the Hon'ble Apex Court in the case of T.S. Cycles of India (supra), in my opinion the cars are not liable for confiscation. Therefore, redemption fine and penalty are not imposable on the appellant. DIFFERENCE OF OPINION 13. The following difference of opinion is placed before the Hon'ble President. 1. Whether the order of confiscation of impugned cars therefore imposition of redemption fine and penalty on the appellant is correct in the facts and circumstances of the case as held by Member (Technical) 2. Whether the confiscation of impugned cars in the facts and circumstances of the case is liable to be set aside, consequently no redemption fine and penalt....
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....ta - 1994 (70) E.L.T. 52 (Cal.), wherein it was held that mens rea and conduct of the party and the attending extenuating circumstances are material and relevant factors for imposition of penalty and for imposition of redemption fine under the Customs Act. The learned Advocate specifically referred to para 31 of this decision. (ii) Akbar Badruddin Jiwani v. CC - 1990 (47) E.L.T. 161 (S.C.). In this case it was held that mens rea is to be established for imposition of penalty under Section 112 of the Customs Act and heavy fine is unwarranted in face of finding of bona fide belief of import being legal. (iii) CCE, Chandigarh v. Sadashiv Ispat Ltd. - 2010 (255) E.L.T. 349 (P&H). In this case it was held that if there is no mens rea on the part of the assessee to clandestinely remove the goods, penalty cannot be imposed on the assessee. (iv) Hindustan Steel Ltd. v. State of Orissa - 1978 (2) E.L.T. (J159) (S.C.). In this case it was held that no penalty should be imposed for technical or venial breach of the legal provisions or where the breach flows from the bona fide belief. He, therefore....
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....nd penalty are imposable on the appellant. 19. After hearing both sides, I find that it has already been held by the learned Member (Technical) in para 5 of the order that assembly of cars from various components brings into existence an excisable item, namely the car, which is distinct or different from the parts from which it is assembled. Therefore, the assembly of car from the component parts amounts to manufacture under Section 2(f) of the Central Excise of the Act and excise duty is liable to be charged on such assembly. There is no dispute on this point that the activity of assembling of the car by the appellant amounts to manufacture. Once a manufacturing activity is undertaken for manufacture of excisable goods, the manufacturer is required to obtain a licence from the Central Excise department under Rule 174 of the Central Excise Rules and if any manufacturing activity is undertaken without a licence from the department, there is a contravention of the Central Excise Rules and the excisable goods so manufactured are liable for confiscation under Ruled 173Q(1)(c) as existing at that time, which is reproduced below :- "RULE 173Q. Confiscation and penalty. - (1)&e....