1985 (4) TMI 165 - AT - Central Excise

Summary

Issues Involved:
1. Arbitrary manner of issuing the show cause notice.
2. Propriety and legality of proceedings in light of a prior final decision.
3. Entitlement to claim deduction of 37% discount for assessable value.
4. Basis and representative character of selected invoices for determining short levy.

Detailed Analysis:

1. Arbitrary manner of issuing the show cause notice:

The appellants argued that the issuance of multiple show cause notices, including modifications on the same day, indicated confusion and arbitrary action by the lower authorities. This caused inconvenience and harassment. For limitation purposes, the relevant date should be 3-10-1973, the date of the final show cause notice. The Tribunal agreed, expressing concern over the lower authorities' inability to firmly make up their minds and accepted the contention that the relevant date for limitation purposes is 3-10-1973.

2. Propriety and legality of proceedings in light of a prior final decision:

The appellants contended that the issue had already been decided in their favor by an order dated 7-11-1974 by the Appellate Collector, and it was improper to re-litigate the same issue for a subsequent period. The Department had accepted the earlier decision but pursued the current proceedings for a different period. The Tribunal acknowledged the merit in the appellants' argument but noted that new material could justify re-opening concluded issues. Thus, they agreed with the Department's stance that the proceedings for the subsequent period were justified.

3. Entitlement to claim deduction of 37% discount for assessable value:

The core issue was whether the appellants could claim a 37% discount deduction for calculating the assessable value. The appellants argued that the sale price should be considered at the godown in New Delhi, not the factory gate, and that the discount was not retained by them but passed on to customers. The Department's case was that the discount was not uniformly allowed. The Tribunal found no significant irregularity in the appellants' invoices and noted that the appellants had paid excess duty in some cases. The Tribunal concluded that the appellants were entitled to the discount deduction, and the charge of duty evasion was not sustainable.

4. Basis and representative character of selected invoices for determining short levy:

The appellants questioned the selection of only 51 invoices out of over 1,000 for determining the short levy and the rationale behind this selection. They argued that the selection process was ad hoc and lacked a cogent basis. The Tribunal agreed that the Department had not satisfactorily explained the representative character of the selected invoices and found that the whole process was without a sound legal basis.

Conclusion:

The Tribunal concluded that the charge of duty evasion was not sustainable in law. They accepted the appellants' contentions, set aside the impugned order dated 2-9-1977, and allowed the appeal.