TaxTMI 
TaxTMI 
2019 (3) TMI 666
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....05.2001 to 31.03.2002. 2.1 Pursuant to investigations carried out by Departmental Officers, a number of apparent discrepancies emerged which inter alia are as under : (i) Appellants having two Open Air Stenters in their factory, one of which was in use at the time of visit of the officers on 31.10.2001. By usage of such Open Air Stenter for processing fabrics, the appellants have violated the conditions stipulated for availment of benefit under Notification No. 16/2001-CE (NT) dated 30.04.2001 and Notification No. 32/2001-CE dated 28.06.2001; (ii) Investment in plant and machinery as on 1st May, 2001 at original value of more than Rs. 3 crores exceeds the conditional limit stipulated in the Notification, and hence, it appeared that the assessee was not eligible to claim the exemption available to Independent Textile Processors. 2.2 In adjudication, the Commissioner vide the impugned Order dated 31.05.2010 inter alia: (i) Denied the benefit of special procedure for payment of duty under Compounded Levy Scheme in terms of Rule 96ZNA of the Central Excise Rules, 1944 under Notification No. 32/2001-CE dated 28.06.2001 during the period from 01.05.2001 to 31.03.2002. Application (F....
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....Stenter; (iii) Ld. Advocate drew our attention to the Statement of Shri. J. Srinavasa Raghavan, Manager of the assessee, from page 123 onwards in question and answer form. In question number 3, Shri. J. Srinivasa Raghavan has averred that they have two Open Air Stenters and that they do batching after stentering. Nowhere in the statement has there been any admission that the working Open Air Stenter was used for heat setting or drying of fabrics. (iv) Ld. Advocate draws our attention to the decision of the Hon'ble High Court of Madras in the case of Shri. R. Makeswaran Vs. The State Rep. by: The Inspector of Police, Coimbatore Dist. in Crl.O.P. No. 10695 of 2014 & M.P. No. 1 of 2014 dated 10.09.2015 wherein at paragraph 7, the observations of the Hon'ble Supreme Court in Yakub Abdul Razak Menon Vs. State of Maharashtra - 2013 (13) S.C.C. 1 have been reproduced by the Hon'ble High Court. Ld. Advocate also drew our attention to the observations in respect of evidential value of panchanama. In paragraph 8, the Hon'ble High Court of Madras has held that a seizure memo is nothing but a corroborative piece of evidence. * With regard to the dispute concerning value of plant and machin....
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....well, namely, Shri. J. Srinivasa Raghavan, Shri. T. S. Natarajan and Shri. T. N. Kalaimani. 4. On the other hand, Ld. AR Shri. S. Govindarajan appearing on behalf of the respondent made a number of submissions which can be broadly summarized as under : * With respect to the dispute concerning usage of Open Air Stenter for drying of fabrics : (i) Ld. AR submits that as per the Mahazar, the witnesses had seen that the Open Air Stenter was in operation. Ld. AR further took us through paragraphs 15.01 to 15.02 of the impugned Order to point out that the said Mahazar dated 31.10.2001 was drawn in the presence of Shri. J. Srinivasa Raghavan, Manager, and that the said Mahazar indicated clearly that one of the Open Air Stenters was used for heating or drying of fabrics; (ii) The adjudicating authority has also clearly held that the Statement of Shri. J. Srinivasa Raghavan on 02.11.2001, stating that Open Air Stenter was not used for heat setting or drying, is only an afterthought and cannot be accepted in view of the observational Mahazar drawn on 31.10.2001. * With regard to the dispute concerning value of plant and machinery exceeding Rs. 3 crores : (i) Ld. AR drew our attenti....
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....filed an application under Rule 96ZNA, on 16.05.2001. 8. 96ZNB - Prescribes conditions for availing of special procedure. The first condition to be satisfied is that '...THE ORIGINAL VALUE OF INVESTMENT IN PLANT & MACHNERY INSTALLED IN THE FACTORY..." as on 01.03.2001...... shall not exceed INR 3 crores irrespective of such plant and machinery in working condition or not; 9. The second question is, includibility of value of Generator, Lift, etc., which according to the assessee, are not plant and machinery and the same are to be excluded for determining value of plant and machinery as required under 96ZNB. The Revenue, on the other hand, goes by the balance sheet as on 31.01.2001 and includes the value of the above items. The significance is that, if included, the investment would cross 3 crore of rupees and thus, the condition per 96ZNB remains unsatisfied. Notification No.41/2001 dated 21.09.2001 clarifies the computation of value of plant and machinery in the manner prescribed by the institute as per ACCOUNTING STANDARD - 10. 10. Salient features of AS-10 some of which are relevant for the case on hand, its applicability on the facts of this case and our Analysis, are as unde....
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....ons of an enterprise. Items of property, plant and equipment may also be acquired for safety or environmental reasons. The acquisition of such property, plant and equipment, although not directly increasing the future economic benefits of any particular existing item of property, plant and equipment, may be necessary for an enterprise to obtain the future economic benefits from its other assets. Such items of property, plant and equipment qualify for recognition as assets because they enable an enterprise to derive future economic benefits from related assets in excess of what could be derived had those items not been acquired. For example, a chemical manufacturer may install new chemical handling processes to comply with environmental requirements for the production and storage of dangerous chemicals; related plant enhancements are recognised as an asset because without them the enterprise is unable to manufacture and sell chemicals. The resulting carrying amount of such an asset and related assets is reviewed for impairment in accordance with AS 28, Impairment of Assets. (emphasised in bold, for clarity) Analysis : - This covers a whole lot of items, as it is mentioned in the ....
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.... are met. The carrying amount of those parts that are replaced is derecognised in accordance with the derecognition provisions of this Standard (see paragraphs 74-80). (emphasised in bold, for clarity) Analysis : - Some of the items above include spares/spare parts of conveyor belt, wipe ropes, interior walls of a building, requiring replacement at regular intervals; and still they are included as part of PROPERTY, PLANT AND EQUIPMENT. .. 20. Examples of costs that are not costs of an item of property, plant and equipment are: (a) costs of opening a new facility or business, such as, inauguration costs; (b) costs of introducing a new product or service (including costs of advertising and promotional activities); (c) costs of conducting business in a new location or with a new class of customer (including costs of staff training); and (d) administration and other general overhead costs. Analysis : - Only a few of the above class/s are not the costs of an item of property, plant and equipment and the same doesn't cover other classes. Typically, the above costs are in the revenue field with no impact on the balance sheet. ... ... 40. A class of property, plant and equipment ....
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....ing the application whereas, 96ZNB prescribes conditions for availing of special procedure. Hence, in the background of our findings that here in the case on hand and the facts of this case, the appellant has not got through in its first hurdle as far as threshold investment limit is concerned, thus the mere application filed under 96ZNA per se will not confer any benefit, much less of the kind sought for by the appellant herein. 13. From the facts on record, what comes to the fore is that the Show Cause Notice has categorized the clearances into three types. 14.1.1 Type 1 concerns valuation of fabrics cleared on job work basis to M/s. Jansons Industries Ltd. who, in turn, use the processed fabrics to manufacture dhotis, etc. The Department has taken the view that valuation requires to be adopted at 115% of the cost of production. What cannot be dispute is that the appellant was only doing a job work on materials provided by their principals. In this regard, we find merit in the contention of the appellants that in such cases, the method of valuation laid down in M/s. Ujagar Prints Ltd. (supra) and reiterated in M/s. Pawan Biscuits Co. (Pvt.) Ltd. Vs. Collector of Central Excise,....
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....cisions of the Apex Court. No differential duty is payable on the goods sent for export..." 14.2 The second type of clearance on which duty has been demanded relates to the processed goods sent via appellant to M/s. Jansons Exports. There is no dispute that such processed goods were sent on payment of compounded duty and thereafter exported. We are therefore in agreement with the submission of the appellant that for this reason, there cannot be any demand of differential duty. 14.3.1 The third type of clearance alluded to in the Show Cause Notice concerns goods processed and cleared to independent customers on job work basis. The appellant has argued that the differential duty is calculated here also by deducting the compounded levy from the value shown in the invoice. It is also argued that the valuation method imposed by the Department is without any legal basis and that the valuation should be under the ratio laid down by the Hon'ble Apex Court in the case of M/s. Ujagar Prints Ltd. (supra). 14.3.2 In the grounds of appeal, the appellants have contended that no findings have been given by the adjudicating authority with regard to the detailed submissions made on this aspe....
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....6ZNA and 96ZNB of the erstwhile Central Excise Rules, 1944 and Notification No. 32/2001-CE (NT) dated 30.04.2001. Even as of now, the appellants are still disputing the manner and method of quantification of duty liability and have argued, as discussed supra, that the demand should only be to the extent of Rs. 68,65,550/- against the confirmed demand of Rs. 2,17,05,582/-. 16.2 We also find merit in the argument of the Ld. Advocate for the appellants that the only basis for alleging suppression is that actual value of plant and machinery was not disclosed in their application dated 16.05.2001 and that the Department identified 'other fixed assets' from the appellant's balance sheet as on 31.03.2001. The appellants have averred that the very same balance sheet was submitted by them along with the application, as recorded in paragraph 7.05 of the Order-in-Original. 17. In the circumstances, we are of the considered opinion that no suppression can be assailed against the appellant. In consequence, we hold that the penalty of Rs. 2,17,05,582/- under Section 11AC of the Central Excise Act, 1944 and Rule 173Q of the erstwhile Central Excise Rules, 1944 read with Section 38A of the Act i....
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....on of the statements recorded from 02.11.2001 to 27.02.2002 from Shri. J. Srinivasa Raghavan authorized signatory of M/s. JTP wherein he has not made any such admissions regarding proprietary interest. 21.1 While the findings and decisions in the impugned Order span around 13 to 14 pages, there is no discussion with regard to the allegations made against these three persons that they have actively connived or conspired to facilitate the "proprietary interest" aspect alleged by the Department. 21.2 The only discussion remains in paragraph 21.01 wherein the only finding against Shri. T.S.Natarajan and Shri. T.N.Kalaimani are that "being partners of the above firm, cannot disown their responsibility in giving false declaration to the Department". It is also alleged that the partners are at the helm of affairs of management of the firm and are directly responsible for the omission and commission in this case, leading to loss of revenue to Government. This is as bald and presumptive as a conclusion can be. 21.3 The finding against Shri. J. Srinivasa Raghavan is that he was the authorized signatory and "has failed to furnish the details regarding the value of plant and machinery as co....