Commnr. Of Central Excise, Tamil Nadu vs M/S. Southern Structurals Ltd

1. Respondent company is an undertaking wholly owned by the Government of Tamil Nadu. It is engaged in the manufacture of railway wagons and conveyor systems falling under Heading 8605.50 and 8428.00 respectively of the Schedule to Central Excise Tariff Act, 1985. Upon verification of their accounts, it was noticed on 16th July 1998 that the respondent had entered into a contract, being Contract No.94/RS/PF&EC/954/3 dated 1.12.1994, with the Southern Railways for manufacture and supply of 106 wagons of BTPGLN wagons for an amount of Rs.16,10,90,974/- which was inclusive of cost of steel at Rs.6,65,833/- per wagon. The cost of each wagon worked out to Rs.15,29,724/- (6,55,833 + 8,63,891). The Railways supplied free raw material worth Rs.7 lac per wagon. The respondent paid central excise duty @ 15% ad valorem and cleared 21 wagons to their customer till 16th July 1998. It was also noticed that the respondent has adjusted the value mentioned C.A.No.180/03 .... (contd.) -2- in the invoices against 50% of the advance amount received from its customer. Respondent had also collected a sum of Rs.2,400/- per wagon as by way of inspection charges. This amount allegedly was not included in the assessable value. The total amount of advance received was to the tune of Rs.10,29,80,192/-. The respondent also raised a bill being Bill No.20 dated 4.6.1998 for escalation price for 19 wagons and the amount on this account was Rs.18,81,036/- for which the amount of duty involved was Rs.2,82,155/- which amount, it was alleged, had not been debited by the respondent. According to the appellant, the respondent had suppressed the value in the invoice with a view to enjoy the benefit of duty involved on differential value. Proceedings were, therefore, initiated against the respondent by issuance of Show Cause Notice No.98 of 1998 dated 28th September 1998 on the following charges :

4. Aggrieved against the said order-in-original passed by the Commissioner, the respondent preferred an appeal before the C.A.No.180/03 .... (contd.) -4- Customs, Excise & Gold (Control) Appellate Tribunal (for short, 'the Tribunal'), Chennai. The matter came up before a two-member Bench of the Tribunal.

15. The third Member being Member (Technical) agreed with the Member (Judicial) and after referring to the similar issue decided by the Assistant Commissioner vide order no.71/96 mentioned above, held that it could not be validly said that the facts were suppressed. He, therefore, held that the demand was time barred.

16. On the inspection charges he held that the same are includible in the assessable value. Hence, he agreed with both the members on this point. He, therefore, allowed the appeal on merits and held that the demand was time barred and set aside the order of the Commissioner.

17. Accordingly, by a majority of 2:1, the appeal of the assessee was allowed.

18. Aggrieved, the Department has come up in appeal before us.

22. Majority opinion of the Tribunal is also in line with and in consonance with the findings recorded by this Court.

23. Following the said judgment, a number of appeals have been disposed of by this Court.

24. We find no merit in the appeal and the same is dismissed.

Sd/-

...........................J. [J.M. PANCHAL] New Delhi.

August 06, 2008.