| SooperKanoon Citation | sooperkanoon.com/11045 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi |
| Decided On | Apr-11-1997 |
| Reported in | (1997)LC443Tri(Delhi) |
| Appellant | Autolite (India) Ltd. |
| Respondent | Collector of Central Excise |
2. Appellant is engaged in the manufacture of head-lights and accessories thereof falling under sub-heading 8512.00 of the Schedule to the Central Excise Tariff Act, 1985 (for short, CETA). In the course of surprise visit by Anti Evasion staff, the following discrepancies were found - (2) There was shortage of 787 units of headlights of another model cleared without payment of duty.
(3) There were suppression of the fact that in supplying headlights to M/s. Maruti Udyog Limited, bulbs were also fitted and the value of such bulbs was not included in the value of headlights thereby evading duty.
Appellant resisted the proposals in the show cause notice based on the irregularities and also contended that the claim in regard to valuation was barred by time. The Additional Collector overruled these contentions and passed the impugned order. Hence the present appeal.
3. The surprise visit was on 16th and 17th June, 1987. It was found that 846 units of headlights were in excess over the recorded stock. By a letter dated 23-6-1987 the appellant informed the Assistant Collector that the Anti Evasion party had not correctly counted the stock in spite of objection and subsequently the appellant verified and found that there was only excess of only nine units. In reply to the show cause notice, however, it was stated that at the time of surprise visit production of 624 units on 15-6-1987 had not been entered in the RG1 register and this accounted for bulk of the excess found. The Additional Collector was not satisfied with this explanation. It is significant to note that within a few days of the surprise visit, namely, 23-6-1987 when the appellant wrote to the Assistant Collector it was not stated that the bulk of the excess was on account of non-recording in the RG1 register of the head lights produced on 15-6-1987. No materials were produced before the Additional Collector and have also not been produced before us to show that 624 units were produced on 15-6-1987 and had not been incorporated in the RG1 register before the surprise visit on 16-6-1987. In the circumstances, the challenge against the excess found has to fail.
4. The Panchnama recites that 787 units of another model of headlight was found short. It was also alleged that the goods had been cleared without payment of duty. In reply to the show cause notice, appellant stated that 338 units were broken and the broken pieces were lying in the bonded store room and 320 units were in the finishing room as can be seen from the entry made in column 15 of the RG1 register and this had not been taken into account. Fifty pieces were said to have been lying separately for export. This stand was also not taken in the letter dated 23-6-1987. No other material was produced to prove that 338 units had been broken and the broken pieces were lying in the bonded store room. There is nothing to indicate that 320 pieces lying in the finishing room had not been taken into account by the excise officers. In the circumstances, the challenge against this finding also must fail.
5. It is next contended that even if it is found that 846 units were in excess the same cannot be confiscated. For this purpose reliance was placed on the decision of the Andhra Pradesh High Court in Southern Steel Ltd. v. Union of India -1979 (4) E.L.T. (J 402) and the decision of the Tribunal in Kamal Plywood & Allied Industries P. Ltd. v.Collector of Central Excise, Meerut - 1996 (82) E.L.T. 323. In the first case goods were found in excess and were seized. Goods had not been removed by the manufacturer. It was held that unless goods had been removed in contravention of rules, the power of seizure could not be exercised. In the second case, 34 pieces were found in the bonded store room unaccounted for. They related to the production of the previous day and could not be entered in the statutory record when the officers visited the factory since the dealing assistant was on leave.
Therefore, it was held that the breach was purely technical and the goods could not be confiscated.
6. Rule 173Q of the Central Excise Rules, 1944 deals with Confiscation and Penalty. Clauses (a), (b) and (d) of Sub-rule (1) of the Rule read thus : (a) removes any excisable goods in contravention of any of the provisions of these rules; or (b) does not account for any excisable goods manufactured, produced or stored by him; or (d) contravenes any of the provisions of these rules with intent to evade payment of duty, The allegation in the instant case was that the excess of goods was not on account of removal of excisable goods in contravention of rules but that the manufacturer failed to account for excisable goods produced or stored by him. Rule 173Q(1)(b) was not considered in the aforesaid decisions. In this case 846 units of headlights manufactured by the appellant had not been accounted for and therefore the goods are liable for confiscation under Rule 173Q(1)(b) of the Rules. Hence the contention that goods could not be confiscated is not sustainable.
7. The allegation in regard to valuation relates to goods supplied to M/s. Maruti Udyog Ltd. According to the appellant there was a contract for supply of headlights and the contract stipulated that the buyer would supply free of cost bulbs to be fitted to the headlights and accordingly bulbs were supplied by the buyer free of cost to be fitted to the headlights before clearance. It was on this ground that the appellant contended that the value of the bulbs cannot be included in the assessable value of headlights. The adjudicating authority rejected this contention. Learned Counsel for the appellant contended that bulb is only an accessory and not a component part of the head-light. There is no dispute that headlight in question falls under sub-heading 85.12 which reads thus : "Electrical lighting or signalling equipment (excluding articles of Heading No. 85.39)." Electrical filament lamp by itself would fall under sub-heading 85.39.
The period covered by demand is from 16-1-1986 to 17-6-1987. Appellant has produced price list dated 31-5-1987 and copy of the buyer's order dated 21-4-1987. It is true that this order requires the buyer to supply free of cost bulbs to the manufacturer to fit these bulbs in the headlights manufactured. This order was given by the buyer almost at the fag end of the period covered by the demand. Appellant has not produced either price list or copy of the contract or purchase order in force during the bulk of the period under consideration. Therefore, it is not known whether relevant purchase order contained a clause similar to the one contained in the order dated 21-4-1987.
8. Heading 85.12 of the Tariff refers to electrical lights. In ordinary parlance, electrical light must include bulb also. An article which has no bulb cannot in ordinary parlance be regarded as electrical light.
This was how the party has dealt with the matter also. There is no dispute that at the time of clearance, headlights contained bulbs. It is therefore clear that bulbs are integral parts of the headlights so cleared. It is difficult to accept that bulb is only an accessory. Even assuming that it is an accessory since it is fitted to the headlight before clearance, the value thereof has to be added to the assessable value of the headlight. The contention in regard to valuation must fail.
9. Appellant had supplied head-lights to M/s. Lohia Machines. It appears that the buyer had taken credit of the duty paid on the consignment but subsequently rejected the consignment as defective, reversed the credit and issued Gate Pass in favour of the appellant.
Rejected goods were received by the appellant on the strength of such Gate Pass. It is pointed out that immediately the appellant had filed D-3 intimation with the proper officer who verified the goods and the same were entered in the Form V register. Thereupon the appellant took credit of the duty on the Gate Pass. It appears that the staff of the Anti Evasion unit informed the appellant that credit could not have been taken and immediately the appellant reversed the credit also. The show cause notice proposed appropriation of the credit amount on account of violation of Rule 57A of the Rules and this proposal was confirmed by the impugned order. This part of the order is also challenged.
10. It is contended for the appellant that there is no provision in the Central Excise Act, 1944 or the Rules thereof empowering the proper officer to "appropriate" amount of credit irregularly taken. We asked Shri K. Srivastava, SDR whether there is any such provision but he was not able to point out any such. His attempt was to show that violation of Rule 57A enabled imposition of penalty and the "appropriation" must have been by way of imposition of penalty. We are not able to agree.
There is a separate penalty imposed on the appellant. Even otherwise, "appropriation" of credit wrongly taken is something foreign to the scope of the statute or the Rules. In any event, such "appropriation" could not have been made after the manufacturer reversed the credit entry. This part of the order cannot stand.
11. The last contention urged by the Learned Counsel for the appellant is that since the show cause notice was issued on 10-12-1987 in respect of the period from 16-1-1986 to 17-6-1987, part of the demand in respect of the value of bulb is barred by limitation. The show cause notice alleged that the appellant had not declared the value of bulbs in the price list and has suppressed the same and there was wilful mis-statement of value with intent to evade payment of duty. It is contended that along with price list the appellant had enclosed copy of the contract and according to the contract the buyers were to supply bulbs free of cost and the appellant was to fit the bulbs in the headlights before clearance. It is therefore contended that there was no suppression or mis-statement. We have already pointed out that what is produced before us is a copy of the order dated 21-4-1987 which was about eight months prior to the issue of show cause notice. Appellant has not produced before us copy of the order in force according to which supply was made prior to six months from to the date of show cause notice. Therefore we are not in a position to agree that the copy of the contract filed along with relevant price list disclosed supply, free of cost, of bulbs by the buyer and the requirement that the appellant was to fit such bulbs before clearance. The allegation of suppression of material facts and mis-statement of value has to be sustained. In the absence of any explanation, the necessary inference is that this was with intent to evade duty. We therefore hold that no part of the demand is barred by time.
12. In the result, we set aside part of the order directing "appropriation" of the credit wrongly taken and confirm the order in other respects. Appeal allowed in part accordingly.