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Phoenix International Ltd V/S Commissioner of Central Excise, Noida-I


    Excise Appeal No. 70096 of 2018-[DB] (Arising out of Order-in-Appeal No. NOI-EXCUS-001-APP-1374-17-18 dated 30/10/2017 passed by Commissioner (Appeals) Central Tax Commissionerate, Noida)

    Decided On, 06 January 2020

    At, Customs Excise Service Tax Appellate Tribunal Regional Bench Allahabad

    By, THE HONORABLE JUSTICE: ARCHANA WADHWA
    By, MEMBER AND THE HONORABLE JUSTICE: ANIL G. SHAKKARWAR
    By, MEMBER

    For Petitioner: Jitin Singhal and Pravesh Bahuguna, Advocates And For Respondents: Santosh Kumar Agarwal, Authorised Representative



Judgment Text


1. Above stated appeal is arising out of Order-in-Appeal No. NOI-EXCUS-001-APP-1374-17-18 dated 30/10/2017 passed by Commissioner (Appeals) Central Tax Commissionerate, Noida.

2. Brief facts of the case are that the appellants were manufacturer of 'Reebok' brand shoes falling under Chapter Subheading No. 6401.11 of schedule to Central Excise Tariff Act, 1985. They were paying Central Excise duty and were not availing any benefit of Modvat scheme. For the clearances made during the period from August, 1996 to December, 1996 appellant were issued with a show cause notice dated 21.02.1997. It was stated in the said show cause notice that appellant were issued with another show cause notice under Customs Act, which was issued on 01.07.1996 and through the said show cause notice various raw materials imported by the appellants were alleged to be undervalued on their import into India and differential Customs duty of Rs. 34,430/- and CVD of Rs. 15,493/- was demanded. It was further stated in the show cause notice dated 21.02.2019 that in terms of Hon'ble Supreme Court's judgment in the case of M/s. Ujagar Prints & Others Vs Union of India reported at : 1988 (19) ECR 578 (SC) since the cost of the material used by the appellant was enhanced the assessable value of the goods manufactured by the appellant during the aforesaid period should be enhanced to Rs. 2,31,55,267/- against the actual value of clearance of Rs. 28,99,988/-. Therefore, on the differential value of clearance of 9215 pairs of shoes differential Central Excise duty payable @ 15% ad valorem working out to Rs. 30,38,292/- was demandable from the appellant. Therefore, through the said show cause notice dated 21.02.1997 appellant were called upon to show cause, as to why differential Central Excise duty amounting to Rs. 30,38,292/- should not be demanded from the appellant. The appellant contested before the Original Adjudicating Authority that when the raw materials were imported their assessments were carried out by Customs Department and duties were collected and raw materials were cleared on payment of Customs duty at relevant time. Therefore, the said show cause notice issued by the Customs Authorities on 01.07.1996 was amounting to re-assessment of the goods already imported and the same was not permissible under law. For the said contention they relied on the ruling by Hon'ble Supreme Court in the case of M/s. Priya Blue Industries Ltd. Vs Commissioner of Central Excise reported at : 2004 (172) ELT 145 (SC). They further contended that extended period of limitation was not invokable in the facts of the present case as there was no allegation about the suppression or misstatement in the show cause notice dated 21.02.1997. The Original Adjudicating Authority confirmed the demand and ordered to pay the appropriate interest on the confirmed amount. Aggrieved by the said order, appellant preferred appeal before Commissioner (Appeals). Learned Commissioner (Appeals) did not interfere with the order passed by the Original Adjudicating Authority and rejected the appeal filed by the appellant. Aggrieved by the said order, appellant is before this Tribunal.

3. Heard Shri Jitin Singhal and Shri Pravesh Bahuguna learned Advocates appearing for the appellant. They have submitted that there were no allegations in the subject show cause notice that the assessable value on shoes manufactured and cleared by the appellant during the period of show cause notice was not the sole consideration and there were no allegations that there was any flow back of consideration to the appellant. Further, there were no allegations in the show cause notice that the assessable value was below the cost of production. They further submitted that because of both the above stated reasons there cannot be any reason to reject the assessable value declared by the appellant as held by this Tribunal in the case of M/s. Guru Nanak Refrigeration Corporation Vs Commissioner of Central Excise, New Delhi reported as: 1996 (81) ELT 290 (T) which was affirmed by Hon'ble Supreme Court as reported as 2013 (153) ELT 249 (SC). They further submitted that no reliance can be placed on show cause notice dated 01.07.1996 issued by Customs Authorities to re-determine the assessable value of 'Reebok' brand shoes manufactured and cleared by the appellant during the relevant period because CIF value of 52 different models of 'Reebok' brand shoes which were forming part of show cause notice dated 01.07.1996 cannot be adopted for the purpose of determining assessable value of 9215 pairs of shoes manufactured and cleared by the appellant during the period from August, 1996 to December, 1996.

4. Heard Shri Santosh Kumar Agarwal learned Authorised Representative appearing for Revenue. He has supported the impugned order.

5. Having considered the submissions from both the sides and on perusal of record, we note that through the proceedings revenue is attempting to re-determine the assessable value of goods cleared by the appellant during the period from August, 1996 to December, 1996. The appellant has submitted that there were no allegations in the show cause notice that the price at which the goods were sold by the appellant to the buyers was not the sole consideration and they have also submitted that there were no allegations that there was any flow back of consideration from the buyers of the appellant. They have further relied on this Tribunal's decision in the case of M/s. Guru Nanak Refrigeration Corporation (supra) which was affirmed by Hon'ble Supreme Court. For the sake of ready reference, we reproduce para-7 of the said Final Order of this Tribunal in the case of M/s. Guru Nanak Refrigeration Corporation (supra) as bellow:-

"7. In the case of Union of India & Others v. Bombay Tyre International Ltd. etc., the Hon'ble Supreme Court in para 25 reported in : 1983 (14) E.L.T. 1896 of their order held:

"25. Accordingly, we hold that pursuant to the old S. 4(a) the value of an excisable article for the purpose of the excise levy should be taken to be the price at which the excisable article is sold by the assessee to a buyer at arm's length in the course of wholesale trade at the time and place or removal. Where, however, the excisable article is not sold by the assessee in wholesale trade but, for example, is consumed by the assessee in his own industry the case is one where under the old S. 4(a) the value must be determined as the price at which the excisable article or an article of the like kind and quality is capable of being sold in wholesale trade at the time and place of removal."
From the above rulings in para 25 of the order, we find that the value of excisable article for purpose of excise levy should be taken to be the price at which the excisable article was sold by the assessee to a buyer at arm's length in the course of wholesale trade at the time and place of removal. In the instant case, we find that there is no allegation that there was no price at which the goods were being sold by the assessee to a buyer. We also observe that there was no allegation that the price was not the sole consideration or the dealings between the assessee and the buyers were not at arm's length. There is no allegation that there was a flow back of the money from the buyer to the assessee. Having regard to these factors and examining the price in the instant case, we find that there was no reason to reject the price simply because it was less than the cost of manufacture of raw material, manufacturing cost and the manufacturing profit. Having regard to these rulings of the Hon'ble Supreme Court, we uphold the contentions of the appellants that the price declared by them was a correct price. In the result, the impugned order is set aside and the appeal is allowed."

It is clear from the precedent decision of this Tribunal affirmed by Hon'ble Supreme Court of India that if there are no allegations that there was no price at which the goods were sold by the appellant and if there are no allegations that the price was not the sole consideration for the sale and if there were no allegations that the buyers were not at arm's length and if there are no allegations that there was flow back of money from the buyers to the assessee then revenue cannot reject the price declared by the appellant. We find that in the present case there were no allegations that the price of the goods was not available. In fact the goods were cleared by the appellant during the relevant period with total assessable value of Rs. 28,99,988/- as stated in the show cause notice. We also note that there were no allegations in the show cause notice that price was not sole consideration for sale and there were no allegations that there was any flow back of money from the buyers to the appellant. Therefore, we h

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old that there are no grounds for holding that the appellants have undervalued there clearances during the period from August, 1996 to December, 1996. We, further, note that Hon'ble Supreme Court's ruling in the case of M/s. Ujagar Prints & Others is not applicable in the present case because in the case of M/s. Ujagar Prints & Others, M/s. Ujagar Prints was manufacturer and was under contract to return the manufactured goods to the supplier of raw material. In the present case the appellant is not required to return the goods after manufacture to suppliers of raw material. Therefore, the ruling by Hon'ble Supreme Court in the case of M/s. Ujagar Prints & Others is not applicable to the facts of the present case. We, therefore, do not find any merit in the allegations raised in the said show cause notice dated 21.02.1997. 6. We, therefore, set aside the impugned order and allow the appeal. Appellant shall be entitled for consequential relief, as per law.
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