Gold Star Battery Pvt Ltd Vs C.C.E. & S.T (CESTAT Ahmedabad)
The case at hand pertains to the valuation of Lead Acid Batteries and the determination of whether these should be valued under Section 4 or Section 4A of the Central Excise Act, 1944. The core question revolves around the charging status of the batteries and where the charging occurs.
The appellant argued that the batteries were cleared uncharged and charged at the dealers’ place, constituting a manufacturing activity. This, according to the appellant, would warrant a valuation under Section 4. The primary defense rested on a belatedly filed affidavit supporting this claim.
However, the case faced a lack of documentary evidence, as no supporting information beyond the affidavit was produced to prove that the batteries were cleared uncharged. When asked to produce a product leaflet, it did not confirm that the batteries were supplied in an uncharged state.
In the absence of supporting evidence, the bench determined that the appellant’s clearance of the uncharged Lead Battery was not sufficiently different from the clearance made to individual customers, where the valuation was conducted under Section 4A.
The case serves as a crucial reminder of the importance of substantial evidence in legal proceedings. In the absence of concrete evidence beyond an affidavit, the appellant’s claim could not be substantiated. Therefore, the clearance made to dealers, like that made to individual customers, was ruled to be valued under Section 4A of the Central Excise Act, 1944.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the case are that the appellant M/s. Gold Star Battery are engaged in the manufacture of Lead Acid Battery falling under sub heading 85071000 of the Central Excise Tariff Act, 1985, for use in automobiles/vehicles and the batteries for inverters etc. With effect from 01.06.2006, the “Parts, components and assemblies of automobiles” falling under “any chapter heading” was to be subjected to Retail sale Price (RSP) based assessment, with a specified abatement of 33.5% from the RSP vide entry No. 97 to the Notification No. 11/2006 –CE (NT) dated 29.05.2006. Subsequently, for the same entry abatement percentage of 31.5% was re-specified vide the entry No. 107 under Notification No. 14/2008- CE (NT) dated 01.03.2008 and later on it was re-specified to 30% vide entry No. 108 of the Notification No. 49/2008- CE (NT) dated 24.12.2008.
1.2 Based on the intelligence that the appellant were clearing their manufactured goods Viz. Lead Acid Batteries by assessing them under Section 4 of the Central Excise Act, 1944 instead of Section 4A of the Central Excise Act, 1944 despite the fact that the said goods were used as components in the automobile industry and were required to be subjected to MRP/RSP based assessment, the officers of Preventive Wing, Central Excise, Rajkot, visited the factory premises of the appellant on 14.07.2009 and searched the factory premises in presence of panch witnesses. The officers recovered documents related to the clearance of batteries during the above period under a Panchnama dated 14.07.2009. During Investigation a statement of Shri Navneet Muljibhai Pansara, Executive Director of the appellant was recorded under Section 14 of the Central Excise Act, 1944. After the investigation is completed the appellant were issued the show cause notice dated 13.05.2011 wherein it was contended that the lead acid batteries cleared to the dealers are required to be assessed under Section 4 A of the Central Excise Act, 1944. Accordingly, demand of differential duty between the value under Section 4 and value under Section 4 A was proposed. The show cause notice also proposed to recover interest and impose penalties under Section 11 AC and also personal penalty on the director of the appellant company Shri Navneet Muljibhai Pansara under Rule 26 of Central Excise Rules, 2002. The Adjudicating Authority vide order-in-original dated 20.11.2012 confirmed the charges proposed in the show cause notice. Being aggrieved by the order-In-Original, the appellants filed appeals before the Commissioner (Appeals) who concuring with the view taken by the Adjudicating Authority upheld the order of the Adjudicating Authority and rejected both the appeals filed by the appellant. Therefore, the present appeals.
2. Shri Paresh Sheth, Learned Counsel appearing on behalf of the appellants submits that the appellant have been valuing their Lead Acid Batteries supplied to individual customers under Section 4 A whereas in case of supplies made to the dealer, they value the batteries under Section 4 for the reason that the batteries supplied by the appellant to dealers are not ready to use as at the dealer stage the batteries are required to be charged by adding acid into batteries. He submits that the activity of putting acid and water in the batteries and charging of the same before sale of the batteries is the activity which render the product marketable. This activity amounts to manufacture in terms of Section 2(f)(iii) according to which adoption of any treatment on the goods to render the product marketable to the consumer is activity amounts to manufacture of goods. Therefore, the batteries cleared by the appellant was subjected to other manufacture, hence, the valuation was correctly denied under Section 4 and not under Section 4A.
2.2 He also submits that the entire demand was raised for the extended period of limitation. It is his submission that the appellant have been paying duty on the goods in question under Section 4 and they were filing periodical returns, therefore, there is no suppression of fact on the part of the appellant. Hence, the demand is also hit by limitation which is beyond one year before the issuance of show cause notice. He placed reliance on following judgments:-
