TaxTMI 
TaxTMI 
2026 (9) TMI 179
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....of audit of the records of the Appellant it was observed that:- (i) Primary Cell & Primary batteries allotted a code which read as DBB and the same was cleared to general customers through depot/distributor network. The said excisable goods being removed in the aforesaid manner were on payment of Central Excise duty arrived on the basis of assessable value arrived on the basis of the retail sale price affixed on the package of the said goods as per the provisions of Section 4A of CEA 1944. (ii) Primary Cell & Primary batteries allotted a code which read as AAMJ and the same was removed to general customers through depot/distributor network including Lucknow Depot of the noticee on payment of Central Excise duty arrived on the basis of assessable value arrived on the basis of the retail sale price affixed on the package of the said goods as per the provisions of Section4A of CEA 1944. (iii) Primary Cell & Primary batteries allotted a code which read as AAMJ 1015 which was bang removed to their factory located at Aishbag, Lucknow on payment of Central Excise duty on the assessable value arrived on the basis of CAS 4 costing under the provisions of Section 4....
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.... by M/s PMS Haridwar & M/s ELLIN Solan which are copacked with batteries supplied by M/s Eveready Industries, Noida. 3) MRP of torches manufactured at their unit located in Lucknow which are sold Co-packedwith batteries on stock transfer by you under CAS-4. 4) All evidences and records /documents in support of their above contention. 2.6 On scrutiny of the documents provided, it was observed that:- * There is no difference in weight, process of manufacture, capacity and quantity are quality of raw materials contained in the batteries that are removed to M/s PMS Flashmatics (P)Ltd, Haridwar & M/s Ellin Electronics Ltd, Solan(H.P.) with those batteries that are removed by them con the basis of stock transfer to their own torch manufacturing plant located at Ashbagh Lucknow. * torches manufactured by M/s PMS Flashmatic (P) Ltd Haridwar and M/s Ellin Electronics Ltd Solan(H.P) are packed with the batteries sold by them to the said two units and the Torches packed along with the said batteries are once again sold back to them by the said two units.That the said batteries packed along with the torches purchased by them are sold to the customers by t....
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....y during the course of that the party was determining the assessable in respect of goods sold to related persons on the basis of contractual price instead of resorting to cost of production method and it was also revealed that they had mutuality of interest in the business of the buyers and vice versa. They did not declare the above facts of in their ER-Is submitted to the department. This fact came into notice of the department at the time of audit, from examination of the Memorandum of Understanding, the marketing pattern of goods, invoices issued and the valuation of identical goods on the basis of costing adopted for stock transfer to their own unit It appears that the party has willfully suppressed the facts to evade the payment of duty inasmuch as with clear intent to evade payment of duty and therefore provisions under subsection(4) to Section 11A of the Central Excise Act, 1944 were attracted for invoking the extended period of five years for demand and recovery of the duty liability of Rs.4447291 along with interest under the provisions of Section 11AA of the said act. The party have also rendered them liable for penal action under Rule 25 of the Central Excise Rules, 2002....
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....nexure-A. (ii) Interest at applicable rates on the amount at S.No. (i) above should not be demanded and recovered from them under Section 11AA of the Central Excise Act' 1944. (iii) Penalty should not be imposed upon them in terms of Rule 25 of the Central Excise Rules'2002 read with Section 11AC of Central Excise Act'1944. 2.12 First two Show Cause Notices were adjudicated by the Order-In-Original No.72-73/DC/D-V/N-I/2016-17 dated 31.03.2017 holding as follows:- ORDER (i) I confirm the demand & order for recovery of Central Excise duty as short paid and aggregating to an amount of Rs. 91,96,976/- (Rs. Ninety One Lakh Ninety Six Thousand Nine Hundred and Seventy Six only) under Section 11A (4) of the Central Excise Act, 1944 along with interest at appropriate rate under Section 11AA of the Act, ibid, for the period from Nov.'13 to March'16 against M/s. Eveready Industries India Ltd., B-1/2, Sector-80, Phase-II, Noida, issued vide Show Cause Notices bearing C.Nos. V(1)Meerut-II/Tech/ SCN/Eveready/ 63/2014/874 dated 05.08.2016 and V(15) Adj/Eveready/D-V/N-I/135/2016/7077-79 dated 30.12.2016. (ii) I also impose a penalty of....
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.... Phase-II, Noida under Rule 15 of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 for the violation of Rule 4, 6 and '8 of the Central Excise Rules, 2002 read with Rule 8 and Rule 9 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. The dues so adjudged to be paid forthwith. 2.16 Aggrieved appellant filed appeal against this order which has been disposed of vide Order-In-Appeal No.NOI-EXCUS-001APP-28-21-22 dated 31.05.2021 rejecting the appeal filed by the Appellant. 2.17 Aggrieved by the two Order-In-Appeal Appellant has filed these appeals. 3.1 We have heard Shri Atul Gupta, Advocate appearing on behalf of the Appellant and Shri Abhishek Mukherjee, Authorized Representative appearing on behalf of the Revenue. 3.2 Arguing for the Appellant, learned counsel submits that:- a. The Impugned Order suffers from legal infirmities, inasmuch it was passed without considering the submissions made by the Appellant. Reliance has been placed on Kranti Associates Pvt. Ltd. & Another v. Sh. Masood Ahmed Khan & Others, 2011 (273) E.L.T. 345 (S.C.). b. The appellant and the Torch manufac....
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....tor of Central Excise, Bombay, 1995 (78) ELT 401 (SC) * Ispat Industries Ltd. v. CCE, 2006 (199) ELT 509 (Tri.-Mum.) * NRC Ltd. v. CCE, 2007 (209) ELT 22 (Tri.-Mum.) * Chemicals &Fibres of India Ltd. v. CCE, 1988 (33) ELT 551 (Tri.-Del) f. Imposition of Penalty is not sustainable. Reliance is placed on the judgement of the Hon'ble Supreme Court in the case of UOI v. Rajasthan Spinning and Weaving Mills Ltd., 2009 (238) ELT 3 (SC) g. The impugned order travels beyond the show cause notice h. No interest is payable 3.3 Learned Authorized Representative for the Revenue reiterates the findings recorded in the impugned order. 4.1 We have considered the impugned order alongwith the submissions made in the appeal and during the course of argument. 4.2 As the issues involved in both the appeals are identical, in fact the second appeal is in respect of the proceeding initiated by a statement of demand made following the Show Cause Notices considered in Excise Appeal No.71114 of 2018 we are referring to Order-In-Appeal in first appeal only. The impugned order records findings as follows:- "4. I have gone through the mate....
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....supra) the dispute pertained to the much higher price difference between the price at which the goods were sold to dealers and the price of goods at which the goods were sold by such dealers. In M/s Eastern Bakeries Pvt. Ltd. (sapra) case the manufacturer manufactured goods on behalf of M/s Britannia Industries Ltd. and supplied the same to them as per their specification. None of these cited cases deals with a situation when the difference is happening in pricing of identical products cleared to different buyers. In the present case, the difference has been worked out from the details available from the very records of appellant themselves. Further none of these cases deals with a situation where goods are sold to a buyer who co-packs the goods received and sells back the goods wherefrom the goods are sold to ultimate customers. Amid the peculiar circumstances of the case, the revenue's stand is more reasonable. In Dynamic Electronics Ltd. (supra) case dispute pertained to a period from 09-03-1997 to 02-111998, i.e. before the introduction of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. The appellant have also quoted a num....
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....ent for contravention of the provisions of a civil Act. Unless the language of the statute indicates the need to establish the element of mens rea, it is generally sufficient to prove that a default to complying with the statute has occurred and it is wholly unnecessary to ascertain whether such a violation was intentional or not. The breach of a civil obligation which attracts a penalty under the provisions of an Act would immediately attract the levy of penalty irrespective of the fact whether the contravention was made by the defaulter with any guilty intention or not." As far as interest liability is concerned once the duty portion of a demand is confirmed the liability to pay interest is automatic and the assessee is bound to pay interest on the amount of duty, confirmed. Explanation 1 to Section 11AC clarifies that in any case of non-levy, short-levy, non-payment, short-payment or erroneous refund where no SCN has been issued before the date on which the Finance Bill, 2015 receives the assent of the President shall be governed by the provisions of section 11AC as amended by the Finance Act, 2015. Both the demand notices in present appeal have been issued aft....
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....t the Appellant in Show Cause Notice in Para 2 above. Rule 4 & Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 is reproduced below for ready reference:- RULE 4.The value of the excisable goods shall be based on the value of such goods sold by the assessee for delivery at any other time nearest to the time of the removal of goods under assessment, subject, if necessary, to such adjustment on account of the difference in the dates of delivery of such goods and of the excisable goods under assessment, as may appear reasonable. RULE 8. Where whole or part of the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value of such goods that are consumed shall be one hundred and ten per cent of the cost of production or manufacture of such goods. 4.6 We at this juncture take the documents produced by the appellant before the audit and also in course of enquiries for examination. Two documents which need to be examined are Memorandum of Understanding and the letter dated 15.02.2015 of the appellant in response to the querie....
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....e two identified batteries was not at arm's length for the reason it was below the cost of manufacture of the said batteries. 4.10 The Hon'ble Supreme Court in the case of Commissioner of Central Excise, Mumbai V/s Fiat India Pvt. Ltd. reported in 2012 (283) E.L.T. 161 (S.C.) has held as follows:- "43. What can be construed from the plain reading of Section 4 of the Act and the interpretation that is given by this Court on the expression 'normal value' is, where excise duty is chargeable on any excisable goods with reference to value, such value shall be deemed to be the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal and where the assessee and the buyer have no interest directly or indirectly in the business of each other and the price is the sole consideration for the sale. Normal price, therefore, is the amount paid by the buyer for the purchase of goods. In the present case, it is the stand of the revenue that 'loss making price' cannot be the 'normal price' and that too when it is spread over for nearly five years and the consideration being only to penetrate the....
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....rmal price for their cars is higher, they are selling the cars at a lower price to compete with the other manufacturers of similar cars. This is certainly a factor in depressing the sale price to an artificial level; and, lastly, the full commercial cost of manufacturing and selling the cars was not reflected in the lower price. Therefore, merely because the assessee has not sold the cars to the related person and the element of flow back directly from the buyer to the seller is not the allegation in the show cause notices issued, the price at which the assessees had sold its goods to the whole sale trader cannot be accepted as 'normal price' for the sale of cars. 44. We now deal with the second limb of the argument of Shri Bhattacharya, learned ASG that the loss price at which the goods are sold by the assessee clearly indicates or reflects that these goods are not "ordinarily sold" in terms of Section 4(1)(a) of the Act. He submits that admittedly assessees are selling their goods at 100% loss continuously for five years i.e. from the year 1996 to 2001 and therefore, the transactions of the assessees cannot fit into description of expression 'ordinarily sold'. While coun....
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.... course of international trade. The word "ordinarily" necessarily implies the exclusion of "extraordinary" or "special" circumstances. This is clarified by the last phrase in Section 14 which describes an "ordinary" sale as one "where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale ....". Subject to these three conditions laid down in Section 14(1) of time, place and absence of special circumstances, the price of imported goods is to be determined under Section 14(1-A) in accordance with the Rules framed in this behalf." 46. In Ispat Industries Ltd. v. Commissioner of Customs, Mumbai, (2006) 12 SCC 583 = 2006 (202) E.L.T. 561 (S.C.), it is held : "14. From a perusal of the above provisions (quoted above), it is evident that the most important provision for the purpose of valuation of the goods for the purpose of assessment is Section 14 of the Customs Act, 1962. Section 14(1) has already been quoted above, and a perusal of the same shows that the value to be determined is a deemed value and not necessarily the actual value of the goods. Thus, Section 14(1) creates a legal fiction. Section....
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.... 49. In Ashok Leyland Ltd. v. Collector of Central Excise, Madras, (2002) 10 SCC 344 (at page 348) = 2002 (146) E.L.T. 503 (S.C.), it is held : "The price of that commodity will remain the normal price at which those goods are ordinarily sold by the assessee to the public, in other words, the price at which they are sold in the market." 50. In the context of Section 4(1)(a) of the Act, the word 'ordinarily' does not mean majority of the sales; what it means is that price should not be exceptional. In our considered opinion, the word 'ordinarily', by no stretch of imagination, can include extra-ordinary or unusual. In the instant cases, as we have already noticed, the assessees sell their cars in the market continuously for a period of five years at a loss price and claims that it had to do only to compete with the other manufacturers of cars and also to penetrate the market. If such sales are taken as sales made in the ordinary course, it would be anathema for the expression 'ordinarily sold'. There could be instances where a manufacturer may sell his goods at a price less than the cost of manufacturing and manufacturing profit, when the company wants to switch ....
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....t a dealing in the usual course of business, and it is not possible to characterise it as not arising out of agreement made at arms length. In contrast, if there is an extra-ordinary or unusual price, specially low price, charged because of extracommercial considerations, the price charged could not be taken to be fair and reasonable, arrived at on purely commercial basis, as to be counted as the wholesale cash price for levying excise duty under Section 4(1)(a) of the Act. 52. The next submission of Shri Bhattacharya, learned ASG, is that the price at which the cars sold by the assessees is not the sole consideration as envisaged under Section 4(1)(a) of the Act. He would contend that admittedly there exists a consideration other than the price, that is, to penetrate the market. He would also submit that the lower price would enable the assessee to generate higher turnover and this higher turnover is monetary consideration for the assessee received directly from various buyers. In other words, he would submit, the intention to penetrate the market is intertwined with receiving a higher monetary turnover. Therefore, the price is not the sole consideration. However, it is c....
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....ight. It is in consideration of such and such a fact that he agrees to bear new burdens or to forego the benefits which the law already allows him." 57. The gist of the term 'consideration' and its legal significance has been clearly summed up in Section 2(d) of the Indian Contract Act which defines 'consideration' thus : "When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration to the promise." 58. From a conspectus of decisions and dictionary meaning, the inescapable conclusion that follows is that 'consideration' means a reasonable equivalent or other valuable benefit passed on by the promisor to the promisee or by the transferor to the transferee. Similarly, when the word 'consideration' is qualified by the word 'sole', it makes consideration stronger so as to make it sufficient and valuable having regard to the facts, circumstances and necessities of the case. 59. To attract Section 4(1)(a) of the Act what is required is to determine the 'normal price....
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....nstant cases, the price is not the sole consideration when the assessees sold their cars in the wholesale trade. Therefore, the assessing authority was justified in invoking clause(b) of Section 4(1) to arrive at the value of the exercisable goods for the purpose of levy of duty of excise, since the proper price could not be ascertained. Since, Section 4(1)(b) of the Act applies, the valuation requires to be done on the basis of the 1975 Valuation Rules. 61. After amendment of Section 4 :- Section 4 lays down that the valuation of excisable goods chargeable to duty of excises on ad-valorem would be based upon the concept of transaction value for levy of duty. 'Transaction value' means the price actually paid or payable for the goods, when sold, and includes any amount that the buyer is liable to pay to the assessee in connection with the sale, whether payable at the time of sale or at any other time, including any amount charged for, or to make provisions for advertising or publicity, marketing and selling, and storage etc., but does not include duty of excise, sales tax, or any other taxes, if any, actually paid or payable on such goods. Therefore, each removal is a diffe....
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....is Court has concluded that the levy of excise duty was on the manufacture or production of goods, the stage of collection need not in point of time synchronise with the completion of the manufacturing process while the levy had the status of a constitutional concept, the point of collection was located where the statute declared it would be. The Court further went on to observe when enacting the measure to serve as a standard for assessing the levy, legislature need not contour it along lines which spell out the character of the levy itself. From this stand point, it is not possible to accept the contention that because the levy of excise is a levy on goods manufactured or produced, the value of the excisable article must be limited to the manufacturing cost plus the manufacturing profit. The Court further was of the opinion, that a broad-based standard of reference may be adopted for the purpose of determining the measure of levy. Any standard which maintains a manner with the essential character of levy could be regarded as a valid basis for assessing the measure of levy. This Court in this decision also distinguished the view expressed in A.K. Roy &Anr. v. Voltas Ltd., 1977 (1)....
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....djudicating authority after considering the reply filed had confirmed the show cause notice and had directed the assessee to pay the difference in excise duty. In the appeal filed before the Tribunal, the assessee had succeeded. In the appeal filed by the department, this Court was of the view that since in the show cause notice issued by the adjudicating authority there was no allegation that the wholesale price to the buyers was for consideration other than the one at which it was purported to be sold or that it was not at arms length and further, there was no allegation that there was any flow back from the buyer to the assessee and therefore, the department cannot take a stand that the normal price was not ascertainable for the purpose of valuation under Section 4(1)(a) of the Act and therefore, the Tribunal was justified in accepting the whole sale price as the correct price. 65. In Bisleri's case, the issue as noted by the Court was, whether the assessee had undervalued the aerated water (Beverages) by excluding two items, namely, the amounts received under credit notes as price support incentive and rent on containers as assessable value. The Court after referring t....
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.... the decision in Bisleri's case (supra) will also not assist the assessees for the reason that the issue that came up for consideration is entirely different from the legal issue raised in these civil appeals. Before we conclude on this issue, we intend to refer to the often quoted truism of Lord Halsbury that a case is only an authority for what it actually decides and not for what may seem to follow logically from it. We may also note the view expressed by this Court in the case of Sushil Suri v. Central Bureau of Investigation &Anr. (2011) 5 SCC 708, wherein this Court has observed, "Each case depends on its own facts and a close similarity between one case and another is not enough because either a single significant detail may alter the entire aspect. In deciding such cases, one should avoid the temptation to decide cases (as said by Cardozo) by matching the colour of one case against the colour of another. To decide, therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive." We do not intend to overload this judgment by referring to other decisions on this well settled legal principle. 67. Reference to Valuation ....
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....goods are not sold or for any other reason, the 'normal price' would have to be determined in the prescribed manner i.e. prior to 1st day of July, 2000, in accordance with Rules, 1975 and after 1st day of July 2000, in accordance with Rules, 2000. 70. Rule 2 of the 1975 Valuation Rules provides for definition of certain terms, such as "proper officer", "value" etc., Rule 3 of the above Rules, provides that the value of any excisable goods, for the purposes of Clause (b) of Sub-Section (1) of Section 4 of the Act be determined in accordance with these Rules. Rule 4 provides that the value of the excisable goods shall be based on the value of such goods by the assessee for delivery at any other time nearest to the time of removal of goods under assessment. Rule 5 provides that when the goods are sold in the circumstances specified in Clause (a) of Sub-Section (1) of Section (4) of the Act except that the price is not the sole consideration, the value of such goods shall be based on the aggregate price and the amount of the money value of any additional consideration flowing directly or indirectly from the buyer to the assessee. Rule 6 provides, that, if the value of the exci....
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.... buyers of the goods. Even if we hold that there was no relationship than also the value could not have been much less than the cost of manufacture in perpetuity. 4.13 We find that the Appellant was duly registered with the Department filing all the returns as required in terms of the Central Excise Act and Rules there under. 4.14 We find that the agreement etc. were all on record and the Revenue was well aware of the facts hence invocation of extended period of limitation for making the demand would not be proper. Thus, in respect of the Show Cause Notice dated 05.08.2016, we find that the entire demand is barred by limitation having being issued after the prescribed period of limitation. 4.15 Demands made for the subsequent period i.e. December 2014 to 2016 by Show Cause Notice dated 30.12.2016 and statement of demand dated 15.02.2018 for the period 2016-17 to 2017-18 is within the normal period of limitation. Accordingly, taking note of the decisions sited by the Appellant with regards to the invocation of extended period of limitation, we set aside the entire demand made for the period November 2013 to November 2014 and uphold the demand made for the subsequent period ....
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....in Electronics Limited,Village: Belikhol, Post: Manpura - 174101, Teh: Nalagarh, District: Solan (Himachal Pradesh] (hereinafter referred to as "ELIN"). By virtue of this MOU, ELIN agrees to manufacture Flashlights at its manufacturing facility located at the above mentioned factory address and supply the same to ElIL for sale, on the terms and conditions mentioned below Both parties have agreed to the following Terms and Conditions :- 1. Product: Flashlights 2. Specification: As per design and specification of ElIL. 3. Quantity and Schedule:As per PO released by ElIL from time to time. 4. Packaging/Labelling & Trade Mark: ELINshall strictly follow the packaging & labelling instructionsand specifications of ElIL in the manufacture of the said Product. ELIN shall affix only such trade mark as authorised by ElIL from time to time for the purpose of the . manufacture of the said products for supply to ElIL only and shall have no right to the tragimarks of ElIL. ElIL reserves the right to revoke the authority to affix the trademarks given to ELINhereinabove mentioned at its sole discretion and without assigning any reason.ELIN shall hold in trust and shall have no rig....
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....e of the other party or as having authority to assume or create obligations or otherwise act in any manner on behalf of the other party. 13."Governing law : This MOU and all transactions under it will be governed by the laws of India The parties submit to the non-exclusive jurisdiction of the courts of Kolkata. 14. Assignment : Neither party may assign this MOU or any Order or any part thereof without the written consent of the other party, such consent not to be unreasonably withheld. 15. Variation : No variation or amendment of this MOU or any Order will be valid unless made or confirmed in writing. n the witness whereof of the parties hereto have executed those presents the day and the year first erein above written. or Eveready Industries India Ltd ForElin Electronics Limited Authorized signatory For Elin Electronics Limited Authorized signatory Z Witness, Adda LA Planstan. Document 2 9 CIN: L31402WB1934PLC007993 PH :(0120) 4802700 (50 Lines) FAX: (0120) 4802727 WEB: : www.evereadyindustries.com The Superintendent (Audit) Central Excise Audit Group Circle 1B Audit-IIMeerut Commissionerate Ghaziabad 1. 13.2.15 EVEREADY>>> INDUSTRI....