It was in these circumstances that they were asked to show cause why differential duty amounting to 27,71,594/ due to undervalued clearances of the finished goods effected during the period with effect from 02.06.1998 to 30.09.1999 should number be recovered under Proviso to Section 11AC 1 of the Act read with Rule 5 of the Central Excise Valuation Rules, 1975, why penalty under Section 11AC and interest under Section 11AB of the Act should number be levied and recovered and penalty under Rule 209A of the Central Excise Rules, 1944, should number be imposed and recovered from Respondent Nos.
A/75 78/WZB/06/C II EB dated 13.01.2006 has allowed the appeals and has set aside the order passed by the adjudicating authority.
Hence, expenses incurred by Bajaj, in addition to the price, were required to be loaded in the assessable value for payment of Central Excise Duty.
The view of the adjudicating authority was that the price charged in the Central Excise invoices by Anurang for their finished goods was number the sole companysideration for sale, since the proportionate landed companyt charges were number included by Bajaj which is additional companysideration under Rule 5 of the Central Excise Valuation Rules, 1975.
The payment of duty under this rule is number the subject matter, therefore, on this account the pleadings of the assessee and other numberices are number relevant.
It also claimed that there was numberprovision in Central Excise Laws which imposed an obligation on a person to sell his goods at a particular price in such transactions.
Anurag Naresh Chandra, Director of Anurang.
Bajaj, Sh.
E/1817, 1879, 2142 and 2143/02 before the Tribunal.
The issue in this appeal relates to the valuation of aluminum castings manufactured by M s. Anurang Engineering Co. Ltd. for short Anurang which in turn is based on the purchase price of aluminum ingots supplied by M s. Bajaj Auto Ltd., Waluk, Aurangabad for short Bajaj .
The adjudicating authority also imposed penalty on Bajaj of 2.7 lakhs, and personal penalties of 50,000 on Mr. Anurag Nareshchandra, Director, Anurang, and Mr. Ranjit Gupta, Vice President, Bajaj, under Rule 209A of the Central Excise Rules, 1944.
Further, Bajaj was supplying drawings designs specifications free of companyt to Anurang to get the goods manufactured according to their specifications from them, which the Department claimed was for aiding each other for mutual business interest so that the production companyt of each other is kept at a minimum and the Central Excise Duty is discharged at a lower rate.
The Tribunal by its companymon Order No.
The Tribunal inter alia adopted the following reasoning while allowing the appeal However, while adjudicating the matter the Commissioner, in para 16 of the order has observed that In this case there is numberallegation that while paying duty on ingots under Rule 57F 3 M s. Bajaj Auto Ltd. have undervalued the ingots.
Anurang, who is Respondent number 4 in this appeal, is engaged in the manufacture of aluminium castings, companymonly known as handle bar body, crank case clutch, and castings used as motor vehicle parts, classifiable under Chapter Sub heading 8708.00 and 8714.00 of the Central Excise Tariff Act, 1985.
12/CEX/2002 dated 31.03.2002, levied duty of 27,71,594/ under Section 11A 1 , penalty of 27,71,594/ under Section 11AC, and interest under Section 11AB against the assessee Anurang.
It was also alleged that the price charged by Bajaj was depressed price although the same was companyoured as negotiated price and the price indicated in the purchase orders was influenced by the supply of inputs by Bajaj at a lower landed companyt and by this business arrangement, Bajaj had companypensated Anurang for depressed prices of Anurangs finished goods supplied to Bajaj.
Ranjit Gupta, Vice President Materials of Bajaj and Sh.
They also claimed that the numberice and the demand therein was time barred as it had been issued beyond the time prescribed under Section 11A of the Act since the numberice was for the period June 1998 to September 1999, and the numberice date was 05.03.2001 and was served by post on 22.03.2001 , and that jurisdictional officers of the specific division of the Department were well aware of these facts, since both the units are situated under the jurisdiction of the same division.
In reply to the numberice, Bajaj had stated that the sale of inputs aluminum ingots to Anurang was on the basis of fair market price mutually agreed between the parties.
Aggrieved by the said order, the parties before the adjudicating authority filed Appeal Nos.
Bajaj, the Respondent number1, was supplying inputs aluminum ingots after purchasing the same from other manufacturers to Anurang for the relevant period under the companyer of invoices issued under Rule 57F 2 and Rule 57 3 of the Central Excise Rules, 1994, after reversing the MODVAT credit availed on the said input.
Anurang, in their reply, had stated that the price charged by Bajaj to them was for sale of ingots and similarly, final product sold by Anurang to Bajaj was companytracted negotiated prices and, therefore, they have number companytravened any provisions of the Act and the Rules framed thereunder.
If the ingots have been sold at the companyrect value, how the value of the same can be enhanced at the manufacturers end by some hypothetical additions on various grounds.
After adjudication, the adjudicating authority held that the prices charged by Anurang were depressed prices companyoured as negotiated prices.
It is also on record that the statement of the Authorized Representative of M s. Bajaj Auto Ltd. as also of M S. Anurang Egg.
1 to 3 viz.
The above observations made by the Commissioner are in companytrast to the findings arrived at by him.
It was also companytended that there was numberdeliberate suppression of facts, or mis statements or intention to evade Central Excise Duty on their part.
This matter is regarding under valuation of final product.
A show cause numberice dated 05.03.2001 was issued by the Commissioner of Customs and Central Excise, Aurangabad, in which it was alleged that Anurang was receiving inputs from Bajaj at an under valued landed companyt by number including expenses on account of sales tax, octroi, freight, insurance, loading unloading charges and handling charges, and that Bajaj was charging only the basic price of such inputs equal to the basic price charged by the original manufacturers of the said inputs to Bajaj, and since the additional companyt of loading unloading, freight etc.
A/75 78/WZB/06/C II EB dated 13.01.2006, is before us in this appeal filed under Section 130 E of the Customs Act, 1962 hereinafter referred to as the Act .
Thus, both of them were aiding each other for mutual business interest so that the production companyt of each other was kept at minimum and the Central Excise Duty was discharged at lower value.
L. Dattu, J. The appellant, being aggrieved by the order passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai, for short Tribunal in Appeal No.
was number included in the input supplied to Anurang, there was companysequent reduction in the landed companyt of such inputs.
