2006 (4) TMI 371 - AT - Central Excise

Summary

Issues Involved:
1. Assessable value determination of Triclosan.
2. Imposition of penalty during de novo proceedings.
3. Validity of contract price as normal price.
4. Allegations of suppression of facts and misstatement.
5. Applicability of the extended period for demanding duty.

Detailed Analysis:

1. Assessable Value Determination of Triclosan:
The Commissioner determined the assessable value of Triclosan at Rs. 2,242/- per kg, although the appellants sold it at Rs. 1,200/- per kg to M/s. Sodium Metal Pvt. Ltd. The appellants argued that they filed a price list in Part-II and explained the reduction in price due to low sales and stock piling. The price list was approved by the Assistant Commissioner effective from 15-10-93, and the contract price of Rs. 1,200/- per kg was extended for five years. The Tribunal found that the price at which the goods were sold to M/s. Sodium Metal Pvt. Ltd. was higher than the cost of production and provided a reasonable profit margin. Therefore, the price declared under Section 4(1)(a) of the Central Excise Act was correctly declared as the normal price.

2. Imposition of Penalty During De Novo Proceedings:
The appellants contended that the penalty of Rs. 30 lakhs under Rule 173Q(1)(a) imposed during the de novo proceedings was not justified as it was not imposed in the earlier proceedings. The Tribunal agreed, stating that the Commissioner cannot impose additional penalties during de novo proceedings if it was not imposed earlier, as consistently held in various decisions.

3. Validity of Contract Price as Normal Price:
The appellants argued that the contract price of Rs. 1,200/- per kg was valid as per the provisions of Section 4(1)(a) of the Central Excise Act. The Tribunal found that the price declared under the contract was approved by the competent authority and was based on a principal-to-principal basis. The Tribunal also noted that there was no evidence of any additional consideration or relationship between the appellant and M/s. Sodium Metal Pvt. Ltd. that would invalidate the contract price.

4. Allegations of Suppression of Facts and Misstatement:
The Commissioner alleged that the appellants suppressed facts and made willful misstatements by not disclosing that Triclosan sold at Rs. 1,200/- per kg was used in manufacturing Dettol products, which were then sold back to the appellants. The Tribunal found that the appellants were not required to disclose the end-use of the product under the law. The Tribunal cited several decisions, including Pearls of Beauty v. C.C.E., New Delhi and Dabur India Ltd. v. Commissioner of Central Excise, Jaipur, which supported the appellants' position that non-disclosure of the end-use does not constitute suppression of facts.

5. Applicability of the Extended Period for Demanding Duty:
The appellants argued that the extended period of five years for demanding duty was not applicable as the price list of Rs. 1,200/- per kg was approved by the Department in 1993 and continued under the same contract. The Tribunal agreed, stating that there was no suppression of facts as the RT-12 Returns and copies of the invoices were submitted to the Department as required by law. The Tribunal also cited several decisions, including M/s. Anand Nishikawa Co Ltd. v. Commissioner of Central Excise, Meerut, which supported the appellants' position on the non-applicability of the extended period.

Conclusion:
The Tribunal set aside the order of the Commissioner, confirming that the price of Rs. 1,200/- per kg was the correct assessable value, and the penalties imposed during the de novo proceedings were not justified. The appeal was allowed, and the extended period for demanding duty was deemed inapplicable due to the absence of suppression of facts.