TaxTMI 
TaxTMI 
TaxTMI 
2023 (2) TMI 6
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....on Honda India to cover the loss suffered by the appellant due to cancellation of the order. This amount was not included by the appellant in the transaction value of the scrap that was sold and excise duty was not paid. 2. A show cause notice dated March 29, 2017, was issued to the appellant proposing to demand central excise duty amounting to Rs. 60,75,728/-, alleging that the consideration received by the appellant from Honda India under the guise of compensation was liable to be included in the transaction value of goods. The extended period of limitation under section 11A(4) of the Central Excise Act, 1944 [the Excise Act] was also invoked. The Additional Commissioner, by order dated December 29, 2017, confirmed the demand with interest and also imposed equal penalty upon the appellant. This order was challenged by the appellant before the Commissioner (Appeals) who, by order dated October 26, 2018, confirmed the proposed demand but extended the benefit of cum-duty price. 3. Both the adjudicating authority and the Commissioner (Appeals) recorded a categorical finding that the amount received by the appellant from Honda India should be included in the transaction value since ....
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....sed before the Tribunal which has not been dealt with by the Tribunal. For the aforesaid issue, namely, whether the extended period of limitation could have been invoked or not and the consequential penalty, in the peculiar facts and circumstances of the case, we relegate the appellant to file a review application before the Tribunal and if such a review application is filed within a period of four weeks from today, the same be entertained and the learned Tribunal to take appropriate decision on the same in accordance with law and on its own merits. With this, the Civil Appeal stands dismissed/disposed of." (emphasis supplied) 6. Thus, though the Supreme Court was in complete agreement with the view taken by the Tribunal that the amount of compensation received by the appellant should be included for the purpose of valuation, the limited issue on which the matter has been remanded to the Tribunal is whether the extended period of limitation could be invoked and the consequential penalty could be confirmed. 7. The appellant has, accordingly filed this application claiming that the extended period of limitation contemplated under section 11A(4) of the Central Excise Act, 1944 ....
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.... are the same as for invocation of the extended period of limitation, the Commissioner (Appeals) committed no illegality in confirming the imposition of penalty. 10. The submissions advanced by the learned counsel for the applicant and the learned authorized representative for the department have been considered. 11. In order to appreciate the submissions advanced by the counsel for the applicant and the learned authorized representative appearing for the department, it would be appropriate to reproduce the relevant portions of sub-sections (1) and (4) of section 11A of the Excise Act and they are as follows: "Section 11A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded.- (1) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, for any reason, other than the reason of fraud or collusion or any wilful misstatement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,- (a) the Central Excise Officer shall, within two years from the relevant date, serve notice on the person ch....
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.... per cent. of the duty so determined." 13. In the instant case, the show cause notice dated March 29, 2017 that was issued to the applicant mentioned that the applicant had evaded payment of central excise duty of Rs.60,75,728/- on the additional consideration received by it in the form of compensation from Honda India. It also mentioned that it was only after scrutiny of records of the applicant that it came to the notice of the department that the applicant had received Rs.1,96,59,271/- and Rs.2,94,97,104/- on March 31, 2012 through the two debit notes given by Honda India. Paragraphs 5 and 8 of the show cause notice are reproduced below: "5. And whereas, the consideration under the guise of compensation is includible in the transaction value under Section 4(3)(d) of the Central Excise Act. 1944, and assessee is liable to pay Central Excise Duty on this additional consideration by including it in the assessable value. The assesse appears to have suppressed the Transaction Value of the goods with intent to evade payment of duty as they have never informed the department about the additional consideration in form of compensation collected from the buyers and retained by them. If....
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....,59,271/- & Rs.2,94,97,104/-) collected by the assessee is nothing but form part of total sale value to arrive at the actual transaction value of the said goods and the assessee is liable to pay differential Central Excise Duty amounting to Rs.60,75,728/-, equivalent to duty chargeable en the additional consideration of Rs.4,97,56,75/-received by the assessee. I, accordingly, hold that the assessee had suppressed the taxable value with intent to evade the payment of Central Excise Duty and had contravened the provisions of Section 4(3)(d) of the Central Excise Act, 1944 (hereinafter referred to as "the Act" also) read with Rules 6, 8, 11 of the Central Excise Rules, 2002 and is recoverable from them along with interest under section 11A(4) and 11AA respectively of the Central Excise Act, 1944. xxxx xxxx 5.7. As regards the allegation of suppression of facts, I find that there has been a deliberate act by the assessee to suppress the information about the receiving of compensation from HSCIL in as much as they mis-declared the transaction value by not including the compensation amount in contravention of the provisions of the section 4(3)(d) of the Central Excise Act, 1944 read ....
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....anufactured as per the requirement of HSCIL for use in 2CV model and as per submissions of the appellant this model was discontinued in 2012. Since the said model was discontinued, it is not understood what the buyer will do with the tailor made parts. It appears to be business arrangement between the appellant, HSCIL and the buyer of goods to evade payment of excise duty on the so called amount of compensation, that is why goods were sold to these buyers and HSCIL has paid the amount to HSCIL in the name of compensation to the appellant. 8.1. It is further observed that CE duty is chargeable on the manufacturing activity but duty liability is deferred till the time of clearance and duty is charged on the transaction value. In the case goods were manufactured and the appellant received part amount from the buyer of goods and part amount in the name of compensation from HSCIL against the goods manufactured by it for HSCIL, therefore, the amount received against the goods manufactured was sum total of the amount received as sale of goods and amount received in the name of compensation. In other words the appellant received amount in respect very same manufactured goods from the buy....