Jurispruden tiol - Recent Supreme Court Judgements
CENTRAL Excise Valuation - Manufacture on Job work - Rule 8 of the Valuation Rules (110% of the cost of production) not applicable.
The assessee is engaged in the manufacture of motor vehicle parts from the raw material supplied by the customers of the goods on labour charges basis. In essence, thus, the assessee undertakes job work. After the manufacturing of the motor vehicle parts, the same are supplied to the customers who had placed the orders for the job work.
The Department confirmed demand determining the value at 115% (It was 115% at that time) of the cost of production, as per Rule 8 of the Valuation Rules.
CBEC had in Circular No. 619/10/2002-CX., dated 19-2-2002, clarified that goods manufactured on job work would have to be valued in terms of Rule 11 read with Rule 6 of the Valuation Rules "read with" the judgment of the Supreme Court in Ujagar Prints.
Based on the above Circular, the CESTAT in 2003-TIOL-181-CESTAT-MUM held that Rule 8 was not applicable. This order came on 18.6.2003, against which the Department is in appeal to the Supreme Court. The Apex Court decided this case recently after 12 years.
Rule 8 at that time read as: "Where 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 shall be one hundred and fifteen per cent of the cost of production or manufacture of such goods."
The Supreme Court noted that the CESTAT had rightly pointed out that for the applicability of this Rule two requirements are to be fulfilled.
The first is that the excisable goods that the assessee manufactures are not sold by him and the second requirement is that these goods must be used for consumption either by him or on his behalf in the production or manufacture of other articles.
In the present case, first condition is undoubtedly satisfied as the goods are not sold by the respondent. However, second condition is not at all met or fulfilled inasmuch as the goods are not used by the assessee for consumption either by him or on his behalf in the production or manufacture of other articles.
The Supreme Court held, "Once we come to the conclusion that Rule 8 is not applicable in the case of the respondent, it is Rule 11 only which becomes applicable as that is residuary provision for arriving at the value of any excisable goods which are not determined under any other rule".
The Supreme Court did not find any error in the conclusion arrived at by the Tribunal and dismissed the Revenue appeal.
Please see Commissioner of Central Excise, Pune vs Mahindra Ugine Steel Co Ltd -
Central Excise - Valuation - Assessable Value/Transaction Value - Sales Tax Incentive - 75% of Sales tax collected retained with the assessee as incentive - Not includible in AV prior to 1.7.2000 - Includible in transaction value after 1.7.2000: decision in Commissioner of Central Excise, Jaipur II vs. Super Synotex (India Ltd.) - followed.
Central Excise - Penalty - in a case like the present one, where the legal position and interpretation of unamended Section 4 and the position after the amendment in the said provision with effect from 1.7.2000 was in a fluid state, it would not be appropriate to levy the penalty.
The assessee was availing sales tax exemption under the Sales Tax Incentive Scheme as issued by the State of Rajasthan. Under this Incentive Scheme though the assessee was collecting the full incidence of sales tax from its buyer, 75% thereof was retained by it and only 25% of the said sales tax collected was payable and paid to the State Government in terms of the Incentive Scheme. Since the remaining 75% of the amount of sales tax collected was not included for the purpose of payment of excise duty, the Central Excise Department confirmed the demand and also imposed penalty of equal amount. The penalty was also imposed on the individual officers of the Company.
CESTAT allowed the appeal and the Revenue is before the Supreme Court.
The period involved in this case is November 1996 to July, 2001. This issue came up before the Supreme Court in Commissioner of Central Excise, Jaipur II vs. Super Synotex (India Ltd.) - 2014-TIOL-19-SC-CX. In that case, the Supreme Court held that the 75% sales tax retained by the assessee would not be included in the assessable value prior to 1.7.2000, but this position changed after the amendment in Section 4 with effect form 1.7.2000 and in arriving "the transaction value" the amount of 75% which was retained by the assessee, will be included.
Following that decision, the Supreme Court held that the assessee will not be liable to pay any excise duty on the sales tax amount which was retained under the Incentive Scheme up to 30th June, 2000. However, this component of sales tax which was retained by the assessee after 1.7.2000 shall be includible.
Penalty and extended period: The Supreme Court held that the extended period of limitation as per the proviso of Section 11A(1) of the Central Excise Act, 1944 would be applicable in the given circumstances. But in a case like the present one, where the legal position and interpretation of unamended Section 4 and the position after the amendment in the said provision with effect from 1.7.2000 was in a fluid state, it would not be appropriate to levy the penalty.
Can extended period be invoked when penalty is dropped or can penalty be dropped when extended period is invoked?
Please see Commissioner of Central Excise, Jaipur vs Shree Rajasthan Syntex Ltd -
Central Excise - LPG Cylinders - Reduction in price - Refund - Limitation - Price of cylinders reduced retrospectively by Oil Companies - The period for which refund is sought is July, 1999, to October, 2000. The notification revising the rate of excise duty was issued on 31.10.2000 and given retrospective effect that is, w.e.f., 01.07.1999. Thus, only on the issuance of this notification, the excise duty was reduced. It would, therefore, be clear that 31.10.2000 is the trigger point which entitled the appellant to claim the refund... The appellant assessee is engaged in the manufacture of LPG cylinders and supplied the same to Hindustan Petroleum Corporation Limited and Indian Oil Corporation Limited for the period from July, 1999 to October, 2000. It filed an application dated 19.06.2001 for refund of excise duty to the tune of Rs.26,23,366/- stating that the said LPG cylinders were supplied at price (provisional) revised retrospectively w.e.f., 1.7.1999 as per the purchase orders and further excess excise duty has not been charged from the customers. The AC rejected the refund claim for the period 01.07.1999 to 20.06.2000 on the ground of limitation.
After the regular channels of appeal, the assessee is before the Supreme Court.
The Supreme Court observed,
The period for which refund is sought is July, 1999, to October, 2000. The notification revising the rate of excise duty was issued on 31.10.2000 and given retrospective effect that is, w.e.f., 01.07.1999. Thus, only on the issuance of this notification, the excise duty was reduced. It would, therefore, be clear that 31.10.2000 is the trigger point which entitled the appellant to claim the refund. In the absence of any such notification there was no cause of action in favour of the appellant to make any such application for refund. As a natural consequence, therefore, the period of limitation has to be reckoned from 31.10.2000. It is not in dispute that application for refund was filed on 19.06.2001 and the period of limitation at that time was one year. The applications for refund were, therefore, clearly within limitation. We do not understand the logic or rationale behind the order of the CESTAT counting the period from July, 1999 for which the excess amount was sought to be refunded. The order of the CESTAT is, therefore, palpably wrong and erroneous in law.
The assessee's appeal was allowed.
Please see Sunrays Engineers Pvt Ltd Vs Commissioner of Central Excise, Jaipur-
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