Customization of motor vehicle as per requirement of customer is not manufacture

By | October 5, 2015

Section 2(f) of the Central Excise Act, 1944

Customization of motor vehicle

Facts of the Case

Assessee was engaged in customization of motor vehicle as per requirement of customer .Department argued that as per chapter Note 3 of Chapter 87 body building/fabrication etc. on chassis amounts to manufacture; therefore, customization is also manufacture .

Assessee argued that it was merely carrying out restyling of interior body and not fabricating completely new body and mounting on chassis –

HELD

 Assessee is carrying out activity of cosmetic changes inside/outside of duty paid cars/vehicles and these duty paid vehicles are completely ready for use with its body .Hence, said activity does not amount to manufacture in general sense. Even as per Chapter Note 3 ibid, activity would not amount to manufacture, as assessee has only made partial changes in completely built up vehicle and has neither fabricated any body/equipment nor mounted same on chassis [Para 6]

CESTAT, MUMBAI BENCH

Commissioner of Central Excise, Mumbai-IV

v.

Dilip Chhabria Designs (P.) Ltd.

P.K. JAIN, TECHNICAL MEMBER
AND RAMESH NAIR, JUDICIAL MEMBER

APPEAL NOS. E/225, 329 AND 339/2005-MUM
ORDER NOS. A/2831-2833/2015/EB

AUGUST  31, 2015

Ashutosh Nath, Asstt. Commissioner (AR) for the Appellant. Rajeev D. Wagley and Ms. Anagha Gavade, Advs. for the Respondent.

ORDER

Ramesh Nair, Judical Member – Revenue has filed these three appeals against orders in original No. 25/2003 dated 10/12/2003, OIO No. 26/2003 dated 10/12/2003 and OIO No. 27/2003 dated 10/12/2003 passed by the Commissioner Central Excise, Mumbai-IV, The details of all appeals, order in original and relevant show cause notice are tabulated below:

Sr.No. Appeal No. Show cause notice no. & and Proposed amount Order in original No. and Amount confirmed in the impugned order
1. E/225/05 (Andheri) (i) V/PI/12-34/Gr.A/97 dated 19/5/1998 for Rs. 5,91,487/-

(ii) CEX/RV/K- III/DCDPL/SCN/2003 dated 7/5/2003 for Rs. 49,75,190/-

(iii) DGCEI/WZU/204/12(4) 13/2002 pt. IV dated 1/1/2003 for Rs. 88,34,071/- on customization of vehicles

(iiia) Rs. 1,71,131/denying SSI Exemption

25/2003 dated 10/12/2003 Proceedings of SCN dropped.
2. E/329/05 (Powai Unit) DGCEI/WZU/204/12(4) 13/2002-Pt. V dated 1/1/2003 for Rs. 11,66,802/-on removal of add on kits from Powai unit to Silvassa unit 26/2003 dated 10/12/2003 Demand dropped except Penalty of Rs. 5,000/- on Shri B.D. Bajaj
3. E/339/05 (Silvassa unit) DGCEI/WZU/204/12(4) 13/2002 Pt. II dated 1/1/2003 for

(i) Rs. 16,48,780/- denying exemption Notn. No. 3/2001-CE dated 1/3/2001 on Buses/Tempo Traveller(demand and equal amount of penalty upheld by Hon’ble Bombay High Court)

(ii) Rs. 7,65,888/- denying SSI exemption

(iii) Rs. 4,93,276/- on shortage

(iv) Rs. 1,01,644/- for non accountal in records

(v) Rs. 21,917/- Clandestine removal

(vi) Penalty of Rs. 5,000/- under Rule 173Q & Penalty of Rs. 5,000 on B.D. Bajaj.

27/2003 dated 10/12/2003 Confirmed duty of Rs. 16,48,780/- and equal amount of penalty. Penalty of Rs. 5,000/- under Rule 173Q. Penalty of Rs. 5,000/- on B.D. Bajaj.
Dropped

2. The fact of the case is that M/s. Dilip Chabriya design Pvt. Ltd having three units i.e. Andheri, Powai and Silvasa. They are engaged in customization of motor vehicle falling under chapter heading 8701, 8702, 8703, and 8711 and manufacture of body building of Motor Vehicle falling under 8702. They are also engaged in manufacture of parts/sub assemblies of motor vehicles. In all the three adjudication orders five show cause notices were adjudicated. In the show cause notice summarily demand was proposed on the following counts.

(a) Excise duty demand on customization of the already built up motor vehicle on the ground that the customization or modification of built up motor vehicle amounts to manufacture.
(b) Excise duty demand on the body building falling under chapter heading 8702 denying the exemption Notification No. 3/2001-CE dated 1/3/2001 on the ground that the respondent availed the Cenvat credit of the input which is in violation of condition of said notification.
(c) The excise duty demand on the removal of add on kits on the ground that either it was found short in the stock taking or removed under the cover of challan without issuing the invoices.
(d) Excise duty demand by denying SSI exemption Notification No. 8/2001-CE dated 1/3/2001 during the period 2001-2002 on the ground that the aggregate value of the clearances during the year 2000-2001 exceeded threshold limit of Rs. 3 crores.

2.1 In the adjudication, the adjudicating authority dropped the proceedings in respect of excise duty demand on the customization of the motor vehicles, excise duty demand on alleged removal of add on kit, demand related to SSI exemption on the ground that threshold limit in 2000-01 was below Rs. 3 crores. However excise duty demand on the body building denying claim of Notification No. 3/2001-CE dated 1/3/2001 was confirmed on the ground that the respondent had availed the Cenvat credit. The Adjudicating authority also imposed penalty on Shri. B.D. Bajaj under rule 209A for Rs. 5,000/- each on OIO No. 26/2003 and OIO No. 27/2003 both dated 10/12/2003. Being aggrieved by the three orders in originals dated 10/12/2003 the Revenue filed three appeals before this Tribunal to decide the following issues:

Appeal No. E/225/05

(a) Whether after taking into consideration, the facts and circumstances as stated above, read with the show cause notice, the said order of the Commissioner, Central Excise, Mumbai-IV is legal and proper?
(b) Whether by an order passed under Section 35C of the Act, the CESTAT should:
(i) Hold that major/full customization activity carried out an existing motor vehicles by M/s. DCDPL., Andheri, amounts to manufacture of motor vehicles and consequently, Central Excise duty liability on such customized vehicles amounting to Rs. 86,62,940/- during the period from Dec, 1997 to March, 2002, be ordered to be recovered.
(ii) Deny the exemption availed by M/s. DCDPL, Andheri under the provisions of Notifications No. 08/2001-CE dated 1/3/2001 in respect of clearances effected by it during the year 2001- 2002 and consequently, order recovery of Central Excise duty amounting to Rs. 1,71,131/- liable on such clearances.
(iii) Impose penalty, as proposed under Show cause notice dated 1/1/2003 issued to M/s. DCDPL, Andheri, on all the notices and order recovery of interest on duty liable as above, under the relevant provisions of Central Excise Act, 1944 and the Rules made thereunder.
(iv) Up-hold the proceedings initiated under the SCN’s dated 19/5/1998 and 7/5/2003 issued to M/s. DCDPL, Andheri by the jurisdictional Central Excise Commissionerate, and order recovery of Central Excise duty of Rs. 5,91,487/- and Rs. 49,75,190/- demanded in the said SCN’s respectively, alongwith interest and as well as impose penalty under the relevant provisions of Central Excise laws.
(c) Whether the CESTAT should pass any such other order as may be deemed fit.

Appeal No. E/329/05

(a) Whether after taking into consideration, the facts and circumstances as stated above, read with the show cause notice, the said order of the Commissioner, Central Excise, Mumbai-IV is legal and proper?
(b) Whether by an order passed under Section 35C of the Act, the CESTAT should:
(i) To hold that Central Excise duty is liable on the goods cleared by M/s. DCDPL, Powai to M/s. DCDPL, Silvassa, and consequently, order recovery of Central Excise duty amounting to Rs. 11,66,802/- liable on such clearance.
(ii) Deny the exemption availed by M/s. DCDPL, Andheri under the provisions of Notifications No. 08/2001-CE dated 1/3/2001 in respect of clearances effected by it during the year 2001-2002 and consequently, order recovery of Central Excise duty amounting to Rs. 1,68,317/- liable on such clearances.
(iii) Impose penalty, as proposed under Show cause notice dated 1/1/2003 issued to M/s. DCDPL, Andheri, on all the noticees and order recovery of interest on duty.
(iv) Liable as above under the relevant provisions of the Central Excise Rules, and Rules thereunder.
(v) Impose penalty as provided in Rule 209 A of Central Excise Rules, 1944 and Rule 26 of Central Excise Rules, 2001, viz a penalty not exceeding the duty on the excisable goods or Rupees ten thousand whichever is greater.
(c) Whether the CESTAT should pass any such other order as may be deemed fit.

Appeal No. E/339/05

(a) Whether after taking into consideration, the facts and circumstances as stated above, read with the show cause notice, the said order of the Commissioner, Central Excise, Mumbai-IV is legal and proper?
(b) Whether by an order passed under Section 35C of the Act, the CESTAT should order
(i) To hold that Central Excise duty is liable on the goods; found short during the search operations at M/s. DCDPL, Silvassa, on 30/1/2002 involving Central Excise duty amount to Rs. 4,93,276/-
(ii) The production of which was suppressed by M/s. DCDPL, Silvassa involving Central Excise duty amounting to Rs. 1,01,644/-
(iii) Which were removed under delivery challans, without the cover of Central Excise invoices by M/s. DCDPL, Silvassa, involving Central Excise duty amount to Rs. 21,917/- and consequently, order recovery of total Central Excise duty amounting to Rs. 6,16,837/- liable on aforesaid clearances.
(iv) Deny the exemption availed by M/s. DCDPL, Silvassa under the provisions of Notifications No. 08/2001-CE dated 1/3/2001 in respect of clearances effected by it during the year 2001-2002 and consequently, order recovery of Central Excise duty amounting to Rs. 7,65,837/- liable on such clearances.
(v) Impose penalty, as proposed under Show cause notice dated 1/1/2003 issued to M/s. DCDPL, Andheri, on all the notices and order recovery of interest on duty liable as above, under the relevant provisions of Central Excise Act, 1944 and the Rules made thereunder.
(vi) Up-hold the proceedings initiated under the SCN’s dated 1/1/2003 issued to M/s. DCDPL, Silvassa by all the notices and order recovery of interest on duty liable as above, under the relevant provisions of central Excise Act, 1944 and Rules made thereunder
(vii) Impose penalty, as provided in Rule 173Q & 209A of the Central Excise Rules, 1944 and Rules 25 and 26 of Central Excise Rules, 2001, viz. a penalty not exceeding the duty on the excisable goods or Rupees ten thousand whichever is greater.
(c) Whether the CESTAT should pass any such other order as may be deemed fit.

In an another proceeding the appellant had filed appeal against Order-in-Original No. 27/2003 dated 10/12/2003 challenging the confirmation of demand of Rs. 16,48,780/- before this Tribunal by way of an appeal No. E/574/2004-MUM. on the ground that though the respondent had availed modvat credit but equal amount was lying in balance and subsequently that amount stood lapsed which amount to non-availment of Cenvat credit. This tribunal vide final order no. A/649/2004-WZB/C-II dated 22/7/2004 allowed the appeal of the respondent by extending benefit of notification no. 3/2001 -CE dated 1/3/2001. Against the said Tribunal order, revenue field appeal before Hon’ble Bombay High Court which was allowed by the Hon’ble High Court vide order dated 12/3/2015 wherein the Hon’ble High Court reversed the Tribunal’s by upholding the demand but the penalty was waived. The order of the High Court then attained finality. Aggrieved by the impugned orders the Revenue filed these three appeals.

3. Shri Ashutosh Nath, Ld. Asstt. Commissioner (A.R.) appearing on behalf of the Revenue submits that as regard the customization of motor vehicle, the activity amounts to manufacture on the ground that as per Chapter Note 3 of Chapter 87 the independent activity of building of body/fabrication on the chasis of motor vehicle is amount to manufacture therefore irrespective of the fact that the motor vehicle on which customization was undertaken, though duty paid but body building/fabrication etc. on chasis is independently amounting to manufacture. Therefore even though customization was carried out by the respondent on the duty paid motor vehicles but by virtue of Chapter Note 3 of chapter 87, the activity of customization is amounting to manufacture. He placed reliance on the following judgments:—

(a) CCE v. Satguru Auto Builders 2006 (199) ELT 386 (SC)
(b) Kamal Auto Industries v. Collector of Central Excise 1996 (82) ELT 558 (Trib. – Delhi)
(c) Maruti Udyog v. CCE 2002 taxmann.com 725 (CEGAT – New Delhi)

As regard duty demand on removal of add on kit without payment of duty from Powai unit to Silvassa unit, he submits that the goods were not properly accounted for by the Silvassa unit therefore it amounts to clandestine removal and duty was correctly proposed. He further submits that the Ld. Commissioner has dropped the demand on the ground that Silvassa unit was entitle for Modvat credit therefore even if the duty not paid on the clearances made by Powai unit, it amounts to revenue neutral which is not as per statute. The Powai unit is independently registered and whatever goods manufactured and cleared are liable for duty irrespective whether duty is available as Modvat credit to the Silvassa unit. He further submits that Ld. Commissioner observed that goods transferred from Powai unit to Silvassa units were accounted for by the later, the excise duty would have been discharged at the time of their further clearance of Silvassa unit therefore demand of duty on goods transferred from Powai unit would amount to double demand of duty and that the department should have worked out total clearance from Silvassa unit including those seized from Powai unit. In this regard he submits that Ld. Commissioner made a serious error in as much as no goods were seized at Powai unit on 30/12/2002 therefore the entire findings based on such wrong fact are incorrect. He further submits that during the physical stock at Silvassa unit, no excess stock was found so as to assumed that duty would be paid on its further clearance from Silvassa unit. He also submits that no evidence was produced regarding duty paid clearance from Silvassa unit of the goods said to have been transferred from Powai unit. Therefore the demand of duty amounting to Rs. 11,66,802/- raised in the show cause notice dated 1/1/2003 was liable to confirmed. In regard to OIO No. 27/2003 dated 10/12/2003 he submits that demand of Rs. 16,48,750/- though dropped by the tribunal vide order dated 22/7/2004 but the Hon’ble Bombay High Court vide order dated 12/3/2015 maintained the demand confirmed by original order, hence the same attained finality. Regarding duty of Rs. 4,93,276/-, on shortage of goods found in Silvassa unit, duty of Rs. 1,01,644/- on the kits manufactured but not accounted for in the statutory records and duty of Rs. 21,917/- in respect of kits cleared from Silvassa unit without payment of duty, he submits that Ld. Commissioner dropped the demand on the basis that the stock taking was carried out for individual item whereas accounting was done as per kit and one kit consist of number of parts. He submits that there was no dispute at the time of panachanama drawn therefore whatsoever shortage was recorded at the time of panachanama the same cannot be disputed at later stage. As regard SSI exemption Notification No. 8/2001- Cus claimed by the respondent and allowed by the Ld. Commissioner, he submits that there is apparent error in the computation of aggregate clearance value for the period of 2000-01 in as much as Ld. Commissioner considered the aggregate value of Rs. 2,46,58,245/- which is below the threshold limit the Rs. 3 Crores and accordingly SSI exemption was extended during the year 2001-02. In this regard he submits that the Ld. Commissioner has not taken into account value of Rs. 1,03,04,873/- towards the clearance of buses/tempo traveller for arriving at the aggregate value of clearances during the year 2000- 01. In view of this undisputed facts the total aggregate value during the 2000-01 comes to Rs. 3,49,63,118/-(Rs. 2,46,58,245/- + 1,03,04,873/-). In view of this the respondent is not eligible for SSI exemption during the period 2001-02. Therefore dropping of demand by Ld. Commissioner extending the benefit of SSI exemption in all the three impugned orders are apparently incorrect. As regard the penalty on Shri B. D. Bajaj of Rs. 5,000/- each in impugned Order Nos. 26/2003 and 27/2003 both dated 10/12/2003 on Shri B. D. Bajaj, he submits that the minimum penalty under rule 209A of Central Excise Rules, 1944 and Rule 26 of Central Excise Rules, 2001 is Rs. 10,000/- therefore the Commissioner had no discretion to impose any lower penalty than the minimum penalty of Rs. 10,000/- prescribed under the law.

4. On the other hand, Shri Rajeev Wagle, Ld. Counsel alongwith Ms. Anagha Gawade, Advocate appears for the respondent. He submits that as regard the customization of the cars the respondent is carrying out only restyling of interior body of the duty paid cars. They are not fabricating completely new body and mounting on chassis. The Revenue in their appeal has mainly emphasized on the Chapter Note 3 of Chapter 87 that since the respondent had customized the vehicle as per requirement of the customer, the activity falls under the said Chapter Note 3 and accordingly it amounts to manufacture and liable for duty. He submits that as per the Chapter Note 3 only if the whole body of motor vehicle is fabricated and mounted on chasis, then only it amounts to manufacture, whereas it is admitted fact in the present case that the respondent’s activity is limited to redesigning and restyling of the already built up cars. It is not a case of the Revenue also that the respondent is removing the old body and fabricating a new body and mounting on the chassis. Therefore the activity of the respondent in any case does not fall under the Chapter Note 3 of Chapter 87 of Central Excise Tariff Act. He submits that in view of this fact, the judgments relied upon by the revenue are not applicable as those judgments are related to the issue where the independent body was fabricated. He further submits that as regard the SSI exemption, the respondent was of bona fide belief that clearance of bus/tempo traveller was under exemption notification no. 3/2001 dated 1/3/2001 and accordingly the value of said exempted goods were not liable to be added in the total aggregate value and consequently they were entitle for SSI exemption for the period 2000-01 as well as 2001-02. He submits that clearances on which SSI exemption was availed were very much declared to the department in their returns. The exemption become ineligible only on the ground that the aggregate value of 2000-01 exceeded Rs. 3 crore, which is due to denial of exemption notification No. 3/2001-CE. The issue of eligibility of the said notification was highly contentious and once the Tribunal has allowed it and subsequently the Hon’ble Bombay High Court has reversed the order of the Tribunal. In these circumstances, the respondent had bona fide belief that they were entitle for SSI exemption, hence there is no suppressions of facts or misdeclaration on the part of the respondent, accordingly the demand as related to SSI Exemption is time bar in respect of clearances made beyond one year from the date of show cause notice. As regard the demand of Rs. 11,66,802/- in the OIO No. 26/2003 it was submitted that the clearances are pertaining to the period July 2000 as can be seen from Annexure C-I and C-II of SCN dated 1/1/2003. During the said period the respondent was under SSI exemption limit therefore there is no question of payment of duty. He also submits that since the respondent was at bona fide belief that SSI exemption was available even though demand of Rs. 11,66,802/- is payable, it is time bar as the demand pertains to July 2000 and show cause notice was issued after one year i.e. on 1/1/2003. As regard shortage of stock in Silvassa unit, he submits that the shortage in statutory register as against physical verification of stock were on account of fact that kits received from Powai unit were lying in factory and not accounted in statutory record and only stock of finished kits were entered in the statutory register. It is his submission that had all the loose kits would have counted there would not have been any shortages. He further submits that if the duty is demanded at Powai unit same duty again cannot be charged at Silvassa since the same goods were there as can be seen from Annexure C-I and Annexure B-I. As regard duty demand of Rs. 1,01,644/-, he submits that there is contradiction in Paras 30 and 31 of SCN dated 1/1/2003 and Annexure B-II inasmuch as Paras 30 and 31 of SCN alleged clearance value Rs. 1,59,005/- while the value mentioned in Annexure B-II is Rs. 6,35,272/-, This has been considered by the Ld. Commissioner on page 8 of OIO number 27/2003 therefore duty at the most can be demanded only on Rs 1,59,005/- and not on Rs. 6,35,270/-. As regard duty demand Rs. 21,917/- he submits that this demand was raised on the allegation of clandestine removal whereas no positive evidence was produced therefore the Ld. Commissioner rightly dropped the demand. He further submits that if at all any demand arises the value should be considered as cum duty value and abatement on account of excise duty be extended while re-quantification of the duty.

5. We have carefully considered the submissions made by both sides.

6. In all the appeals the issues to be decided by us are as under:

(a) Whether customisation of the motor vehicles as per requirements of customers is amounts to manufactured as per Section 2(f) of Central Excise Act, 1944 and/or Chapter Note 3 of Chapter 87 of Central Excise tariff.
(b) Whether dropping of demand by the Commissioner on alleged removal of add on kits and parts from Powai and Silvassa units are correct.
(c) Whether the Respondents are entitle for SSI Exemption notification No. 8/2001-CE dated 1/3/2001 during the year 2001-2002.
(d) Whether personal penalty imposed for Rs. 5000/- each in two OIO on Shri BD Bajaj is correct or to be increased to Rs. 10,000/- each.

As regard demand of duty on customization of motor vehicle we find that the respondent is carrying out the activity of cosmetic changes on the duty paid cars and vehicles these duty paid vehicles are completely ready for use with its body. They are doing cosmetic changes as per the requirement of the customer inside and outside of the vehicle. In our considered view these activity do not amount to manufacture for the reason that the original duty paid motor vehicles remained as motor vehicles only, except some changes and due to these changes original identity of the product in terms of Central Excise provisions does not change. We find that revenue in their appeal mainly emphasized on chapter Note 3 of Chapter 87 which is reproduced below:—

“for the purpose of heading Nos. 8701 to 8705 building a body or fabrication or mounting or fitting of structures or equipment on the chassis would amount to manufacture of motor vehicle”

The Revenue contended that any activity of fabrication if undertaken on the chassis of old vehicle and also the activity of mounting or fitting of any equipment on such chassis shall amount to manufacture of a motor vehicle. Each such activity described in the said chapter note would independently qualify for being manufacturing process attracting central excise levy on the resultant motor vehicles in terms of said chapter note. As per the fact of the present case it is undisputed that in the activity of customization of the car, the respondent has only made partial changes in the completely built up vehicle therefore they have neither fabricated any body/equipment nor mounted the same on chassis. Therefore the activity of customization carried out by the respondent does not fall under the four corners of chapter note 3. Considering this undisputed position Ld. Commissioner has correctly held that customization of the Completely built up vehicle does not amount to manufacture even in terms of Chapter Note 3. We do agree with the findings of the Commissioner. As regard the judgments cited by the revenue, we find that in all those judgments the activities were of fabrication of complete body and mounting thereof on the chassis. Therefore the said judgments particularly Kamal Auto Industries (supra), and Satguru Auto Builders (supra) are not applicable in the present case. In view of this, we upheld the setting aside the demand in respect of customization of the motor vehicle. As regard the dropping of the demand on account of alleged removal of add on kits and parts and shortage found in the physical stock verification in Powai and Silvassa units, we find that there are serious conflicts between the allegation made in the show cause notices and Commissioner’s findings in the impugned orders. The Ld. Counsel also made submissions that due to claim of SSI Exemption demand is not sustainable and also it is time bar. We therefore find that as regard demand of excise duty on alleged removal of add on kits and parts from Powai and Silvassa units needs re-consideration. Therefore for this part of the demand we remand the matter to the Original Adjudicating Authority for passing a fresh order after appreciating the facts, considering the representation, if any, made by the respondent, issue of time bar etc. As regard the duty demand related to clearances claimed to be covered under SSI Notification No. 8/2001-CE dated 1/3/2001 during the year 2001-02 it is observed that Ld. Commissioner while computing the aggregate value of Rs. 3 Crores during the year 2000-01 made an error that value of Rs. 1,03,04,873/- towards clearances of bus/tempo traveller was not taken into account therefore aggregate value remained below Rs. 3 Crores, accordingly extended the benefits of SSI Exemption Notification No. 8/2001 -CE dated 1/3/2001. We find that there is no dispute particularly when the Hon’ble Bombay High Court in the appellant’s own case held the clearances of buses/tempo traveller as dutiable denying the exemption Notification No. 3/2001-CE dated 1/3/2001, the value of the same i.e. Rs. 1,03,04,873/- is includible in the threshold limit of Rs. 3 cores during the year 2000-01 and accordingly the respondent is not eligible for SSI Exemption in the year 2001-02. However, the issue of time bar is yet to be considered by the adjudicating authority in respect of duty demand proposed by denying the SSI exemption, we therefore direct the adjudicating authority to reconsider the demand related to SSI exemption from limitation aspect. The Ld. Counsel made submission that whatsoever demand is confirmed the abatement of excise duty be given considering the value as cum duty. We agree with this and direct the Adjudicating authority to compute the duty, if any arise after deduction of excise duty from the cum duty value. As regard personal penalty on Shri B.D. Bajaj we find that Ld. Commissioner has imposed penalty of Rs. 5,000/- in each OIO Nos. 26/2003 dated 10/12/2003 and 27/2003 dated 10/12/2003 whereas on reading of Rule 209A of Central Excise Rules, 1994 and Rule 26 of Central Excise Rules, 2001. We find that minimum limit of penalty amount is Rs. 10,000/- therefore the Commissioner has erred in imposing penalty of Rs. 5,000/- in each order. We therefore hold that the penalty of Rs. 10,000/- in each order on Shri B.D. Bajaj should be imposed. In view of our above discussion, we upheld the setting aside the demand in respect of customization of motor vehicle as held by the Ld. Commissioner in order in OIO No. 25/2003 dated 10/12/2003. However the matter relates to OIO Nos. 26/2003 and 27/2003 both dated 10/12/2003 (Except the demand of Rs. 16,48,780/- which has been finally decided by Hon’ble Bombay High Court vide order dated 12/3/2015) needs to be reconsidered by passing a fresh order by the adjudicating authority. Needless to say that principles of natural justice shall be followed in de novo adjudication, which is expected from the Adjudicating Authority to be completed preferably within three months from receipt of this order. The appeals are disposed of by way of remand.

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