BRAKES INDIA LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) AFTER examining the records and hearing both sides, we note that the short question arising for consideration is whether the assessable value of the goods cleared by the assessee from their up -country depots (Delhi, Calcutta and Pune) during the period October 1997 to February 2000 should be determined by including the freight and warehousing charges collected at such depots. This very question had arisen for our consideration for a previous period in Appeal No. E/411/1999 filed by the same assessee. In the said earlier case, the subject goods were manufactured in their Sholingur factory and cleared on payment of duty. Such payment was based on the price prevailing at their Chennai depot at the time of removal of goods from factory. This method of valuation was objected to by the department and the department's view was upheld by this Bench. It was held that the assessable value of the goods should be the price at the Pune, Delhi and Calcutta depots depending on from where the goods were ultimately sold vide Brakes India Etd. v. CCE, Chennai . Our decision was accepted by the assessee.

(2.) IN the present case, we have to simply follow our earlier decision and, accordingly, the demand of duty raised on the assessee by the lower authorities for the period October 1997 to February 2000 is upheld.

(3.) THERE is a penalty also on the assessee as per the impugned order, which is 50% of the duty demanded from them. This penalty is under Rule 173Q of the Central Excise Rules, 1944. The challenge against this penalty is on the ground that the assessee had no intent to evade payment of duty and that they had acted bona fide in terms of the law of valuation as they understood it. Learned Counsel today reiterates this case of the appellants and submits that, the dispute being in the nature of interpretation of 'place of removal' defined under Section 4 of the Central Excise Act, any penalty on the assessee for not having paid duty on the differential value of the goods at the time of its clearance would not be justifiable. It is submitted that the definition of 'place of removal' was modified in September 1996 and that there was chaos and confusion in the matter over a period of time since then. The earlier part of the period of dispute in this case was comprised within that period of confusion. It is further pointed out by learned Counsel that the differential duty demanded in this case was paid after the Order -in -Original was passed. It is prayed that this aspect, which is indicative of the keenness of the assessee to pay duty, should be taken into account while considering their challenge against the penalty. It is also pointed out that, in the earlier case of the same assessee, the penalty was vacated by the Bench. Learned SDR submits that, in relation to penalty, the present case is distinguishable. It is submitted that, unlike in the earlier case, the assessee in the present case did not pay the differential duty prior to issue of the show -cause notice. Moreover, in the earlier case, the Commissioner himself had held that there was no suppression of facts by the assessee so as to attract Section 11AC of the Central Excise Act. We find that, in the earlier case, the relevant show -cause notices had invoked the extended period of limitation and that was why Section 11AC figured in that case. In the present case all the show -cause notices were issued within the normal period of limitation and therefore there is no question of allegations such as suppression. The penalty in this case is under Rule 173Q. The only point to be examined is whether such a penalty is liable to be imposed on the assessee on the facts of this case and, if so, to what extent. After considering the facts and circumstances of this case, we are of the view that such a high penalty as imposed by the lower authorities is not warranted in this case. As pointed out by learned Counsel, the period of dispute is not much far, in point of time, from the amendment of the definition of 'place of removal' under Section 4. When the assessee says that they had been determining the assessable value of the goods on the basis of how they understood the meaning of 'place of removal' in terms of the amended provisions, the submission cannot be rejected at the threshold. It is also pertinent to note that they had paid the differential duty during the pendency of their appeal before the Commissioner (Appeals). Apparently, they did not want to agitate the matter with a disinclination to pay duty. This conduct of the assessee would certainly be a factor to be reckoned in the context of determining their penal liability. That the goods in question were removed without payment of appropriate duty is an admitted fact. There was a short payment of duty when the goods were cleared and, to that extent, Rule 173Q would get attracted. In the absence of mens rea, the quantum of any penalty to be imposed on the assessee under the said provisions should be within reasonable limits. In our considered view, any such penalty in excess of Rs. 5,00,000/ -(Rupees five lakhs only) would be unreasonable. The quantum of penalty is accordingly reduced.