PRICOL LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) AFTER examining the records and hearing both sides, we find that the appeal itself can be finally disposed of at this stage. Accordingly, after dispensing with predeposit, we take up the appeal.

(2.) THE appellants are manufacturers of speedometers and parts and accessories thereof. Components of speedometer used to be got manufactured under job work contracts. The moulds and dies required for this purpose are manufactured by the appellants and supplied to the job workers, who use these moulds and dies for manufacture of speedometer parts on the account of the appellants and return the products along with moulds and dies to the latter. During the period June -December, 1998, the clearances of the moulds and dies by the appellants to their job workers were made on payment of duty on the assessable value determined by the former. This determination of assessable value, however, was not based on Cost Accounting Standards (CAS - 4) adopted and implemented by the Central Board of Excise and Customs. The Commissioner, by applying CAS -4, determined the correct assessable value of the moulds and dies for the above period and quantified differential duty of Rs.6,30,396/ - and demanded the same from the assessee as per Order -in -Original dated 26.02.2007. He has also imposed penalty of Rs. 1.5 lakhs on the assessee under Rule 173Q of the Central Excise Rules, 1944 read with Section 11AC of the Central Excise Act. Interest on the duty amount has also been demanded under Section 11AB of the Act. The present appeal is against the Commissioner's order, which was passed in de novo proceedings pursuant to the Tribunal's Final Order No. 611 and 612/05 dated 11.03.2005.

(3.) AFTER considering the submissions of learned Counsel and learned SDR, we find that there is no challenge to the demand of duty inasmuch as the valuation of the goods on the basis of CAS -4 and the resultant duty liability have been accepted by the assessee. However, there is serious challenge to the penalty imposed by the Commissioner. It is submitted by the counsel that an amount of Rs. 20 lakhs paid by the assessee towards differential duty on moulds and dies cleared by them to their job workers during the period from January, 1994 is lying with the department and that, if the above demand is adjusted against the same, an amount of Rs. 14 lakhs will still be remaining with the department. In these circumstances, according to learned Counsel, the Commissioner ought not to have imposed any penalty on the assessee. We have heard learned SDR also on this aspect. She points out that, in the remand order itself, the Tribunal had given liberty to the Commissioner to impose penalty on the assessee. After a perusal of the remand order (Final Order No. 611 and 612/05 dated 11.03.2005 ibid), we note that, while restricting the duty liability of the assessee to the period June to December, 1998, this Bench observed that the Commissioner was at liberty to impose penalty for the said period in the event of the demand of duty being confirmed against the assessee, Now that the demand of duty for the said period stands confirmed against the assessee and that the duty liability has been conceded by them, penalty has become irresistible. At this stage, learned Counsel prays for reduction of the quantum of penalty, which prayer is opposed. After careful consideration of the facts and circumstances of the case, we are of the view that the penalty imposed under Rule 173Q need not exceed Rs. 1,00,000/ -(Rupees one lakh Only) Accordingly, by reducing the quantum of penalty, we sustain the impugned order and dispose of this appeal.