2007 (12) TMI 380 - AT - Central Excise

Summary

Issues Involved:
1. Undervaluation of goods and evasion of excise duty
2. Invocation of extended period for demand of duty
3. Legitimacy of different pricing for different regions
4. Confiscation of goods and imposition of penalties

Summary:

1. Undervaluation of goods and evasion of excise duty:
The appellant, M/s. Lime Chemicals Ltd., was accused of undervaluing their product, Activated Calcium Carbonate (DICAL-S and DICAL-C), by clearing it under different trade names (DICAL-S2 and DICAL-C2) at a lower price to evade excise duty. The adjudicating authority confirmed the duty demand of Rs. 14,13,371/- and imposed penalties, stating that the appellant had cleared the goods at a lower value with the intent to evade duty.

2. Invocation of extended period for demand of duty:
The appellant contested the show cause notice as time-barred, arguing that the demand for duty was for the period September 1996 to February 1998, while the notice was issued on 4-8-1998. They claimed that they had submitted all necessary declarations and monthly returns, and thus, the extended period for demand was unjustified. The adjudicating authority, however, held that the appellant had suppressed information, justifying the invocation of the extended period.

3. Legitimacy of different pricing for different regions:
The appellant argued that it was legitimate to sell the same product at different prices to customers in different regions, citing competitive market conditions in Ulhasnagar. The Tribunal found that the appellant's competitors also sold the product at similar prices in Ulhasnagar, supporting the appellant's claim of competitive pricing. The Tribunal referenced several judgments, including Shriram Food & Fertilizers Ltd. v. CCE, Delhi [1996 (85) E.L.T. 34 (Tribunal)], which upheld the practice of different pricing for different regions as permissible under Section 4 of the Central Excise Act, 1944.

4. Confiscation of goods and imposition of penalties:
The adjudicating authority had ordered the confiscation of 23 MT of goods and imposed fines and penalties on the appellant and its officials. However, the Tribunal found that the appellant's actions were based on commercial considerations and not on extraneous or irrational bases. Consequently, the Tribunal set aside the confiscation of goods and the penalties imposed, as the demand for duty did not sustain.

Conclusion:
The Tribunal concluded that there was no undervaluation of the goods cleared to the Ulhasnagar region and that the differential duty confirmed was incorrect. The confiscation of goods and the penalties imposed were also set aside. The appeals were allowed with consequential relief, and no findings were recorded on the issue of limitation.