Larger period of limitation not invokable when all the facts known to the department.

PJ/Case Law/2013-14/2015

Case:-RATNAMANI METALS & TUBES LTD. VsCOMMISSIONER OF C. EX., RAJKOT

Citation:-2013 (293) E.L.T. 674 (Tri. - Ahmd.)

Brief facts:-The relevant facts of the case were that, appellant herein were carrying out the contractual works for M/s. Essar Steels. Allegation in the show cause notice was that the appellant had cleared the goods by depressing the assessable value of the goods by not disclosing and including the cost of free facilities provided by the supplier of inputs, in the form of free of cost power and water, free of cost land and free of cost mobile crane for movement of goods. The lower authorities, after visit to the appellant’s site/premises on 22-1-2001 and after checking the Central Excise records, issued show cause notice dated 24-3-2004, demanding the differential duty, on the ground that there had been mis-declaration or suppression of facts of receipts of free goods, without adding money value of additional considerations received from buyers, and for not including reduced cost of raw materials in the form of non-inclusion of freight charges. It was also alleged in the show cause notice that the appellants had contravened the provisions of Rule 173(c) of Central Excise Rules, 1944 having not filed the declaration with the department. The said show cause notices was adjudicated by the adjudicating authority and vide his order in original, confirmed the demand raised on the Company, along with interest and also imposed equal amount of penalty on the Company and personal penalty on the PRO of the appellant Company. Aggrieved by such an order, appellant preferred appeal before learned Commissioner (Appeals). Learned Commissioner (Appeals) while upholding the order-in-original to the extent it confirmed demand of duty along with interest and penalties on the appellant Company, set aside the order-in-original which imposed personal penalty on the PRO of the appellant Company. Aggrieved with such an order, appellant are in appeal before the Tribunal.

Appellant’s contentions:-Learned counsel appearing for the appellant submitted that appellant had not suppressed any material fact from the department. For this proposition, he drew attention to the invoices raised during the relevant period. He would specifically mention that the invoice indicated fabricated pipes from free issue of material and they had undertaken job work. It was his submission that the cost of material was correctly calculated based on the cost of pipes and their job charges. He further submitted that the Central Excise Registration was taken by the appellant for the site which was provided by M/s. Essar Steels Limited. He also brought the notice the agreement dated 21-12-1999, wherein the appellant’s scope of work and M/s. Essar’s scope of work was listed. It was his submission that the said pipes were consumed by M/s. Essar Steels Limited for Sardar Sarovar Drinking Water Project and hence could not be considered as sale by the appellant to them.

Respondent’s contentions:-Learned departmental representative, on the other hand reiterated the findings of lower authorities.

Reasons of judgment:-On careful consideration of the submissions made by both the sides, the Bench found that the issue involved was regarding valuation of the goods i.e. MS Pipes fabricated by the appellants at the site from the free materials supplied by M/s. Essar Steels Limited. The undisputed facts were that the appellant herein was issued contract on 21-12-1999 for fabrication of pipes for Sardar Sarovar Drinking Water Project, which was awarded to M/s. Essar Steels Limited. The appellants’ had their site in the space or land provided by M/s. Essar Limited. The appellants got themselves registered for that site with the Central Excise department. It had to be presumed that the space provided by M/s. Essar Limited had been shown in the contract, hence Bench asked the appellants to produce the same to the jurisdictional range office for getting themselves registered for discharge of Central Excise duty.

It was found that during the relevant period, the appellants were clearing the goods under challan-cum-invoices. One of such specimen challan bearing No. 132 dated 16-11-2000 was reproduced before. It was evident from the challan/invoice reproduced, which was a duty paying document, the address given was C/O Essar Projects Limited, Opposite Khodiyar Temple, Botad-Gadhada Road, 4 kms. from Botad, Distt. Bhavnagar, and description of the goods specifically indicated as “MS Fabricated Pipes from your supplied free issue material” on job work basis. During the relevant period, the assessments though were self-assessments, the appellants were required to file RT-12 returns, which undisputedly were filed by the appellant therein. It was also to be noted that RT-12 returns to be filed during the relevant period were to be filed along with duty paying documents for the scrutiny of the authorities concerned. If that be so, it could not be held that appellants suppressed material facts from the Revenue authorities, more so, with intention to evade duty. If the documents had been checked properly by the lower authorities, they would had definitely come to the conclusion that the appellants had no reason to suppress the manufacturing of pipes in the area/space provided by M/s. Essar Steels Limited in order to evade payment of duty.

On perusal of work order/contract with M/s. Essar Limited, it was found that the said work order/contract specifically indicated the scope of work of the assessee as well as of M/s. Essar Limited and the same was reproduced. It could be seen from the letter reproduced that M/s. Essar Steels Limited agreed to provide the space and power for fabrication of pipes and water also for hydro testing of pressure of each pipe. It was also to be noted that entire pipes which were fabricated by the appellant were consumed by M/s. Essar Steel Limited for the purpose of construction of Sardar Sarovar Drinking Water Project. These pipes were not sold by M/s. Essar Limited and hence considered as captively consumed. If the goods were captively consumed, the provisions of Valuation Rules, 2000 would apply.
The Bench held that there was no suppression on the part of the assessee, more so when they had attached invoices to RT-12 returns submitted to the authorities. The assessee’s action of fabrication of pipes at the site provided by M/s. Essar Limited was also in the knowledge of Revenue and hence the show cause notice dated 24-3-2004 was time-barred.

The impugned orders were set aside and the appeal was allowed with consequential relief, if any.

Decision:- Appeal allowed.

Comment:- This is yet another case wherein the appeal was allowed solely on limitation grounds as all facts were within the knowledge of the revenue department. It depicts that when nothing has been suppressed from the department, the tool of “limitation” is very effective for quashing the demand.

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