1986 (10) TMI 148 - AT - Central Excise

Summary

Issues Involved:
1. Suppression of facts by not declaring handling charges.
2. Applicability of Rule 10 or Rule 10-A of the Central Excise Rules, 1944.
3. Validity of demand confirmation under Rule 10-A after its deletion.

Issue-wise Detailed Analysis:

1. Suppression of Facts by Not Declaring Handling Charges:
The appellants were manufacturers of Super Masonry Cement, sold through their sole selling agent and sub-agents. The goods were assessed at an ad-valorem rate of duty based on a declared price, which included packing charges but excluded handling charges. The department discovered that handling charges were recovered from customers but not declared in the price list, leading to a demand show cause notice for Rs. 3,65,616.79. The appellants argued that the handling charges were recovered without their knowledge and not passed on to them. However, the tribunal found that the appellants had full control over their agents and were responsible for declaring all charges. The agency agreement indicated that the agents acted on behalf of the manufacturer, and the appellants had access to inspect records and collect payments. Therefore, the tribunal concluded that the appellants suppressed the handling charges from the department by not declaring them in the price list.

2. Applicability of Rule 10 or Rule 10-A of the Central Excise Rules, 1944:
Rule 10 applies to cases of short-levy due to inadvertence, error, collusion, or misstatement by the owner, with a limitation period of three months. Rule 10-A, a residuary clause, applies to cases not covered by Rule 10 and has no time limit. The tribunal referred to the Supreme Court's decisions in Andhra Rerolling Works and Atul Products Ltd., which clarified the distinct applicability of these rules. Given the suppression of handling charges by the appellants, Rule 10 was deemed inapplicable as it did not cover suppression of facts. Instead, Rule 10-A was applicable as it covered short-levy due to suppression of facts, and there was no time limit for raising the demand under this rule. Consequently, the tribunal held that the demand notice was correctly issued under Rule 10-A and was not time-barred.

3. Validity of Demand Confirmation Under Rule 10-A After Its Deletion:
The tribunal addressed whether the demand could be confirmed under Rule 10-A after its deletion. Citing the Larger Bench decision in Atma Steels Private Limited, it was held that proceedings initiated under a valid rule at the time of initiation could continue despite the rule's subsequent repeal. The tribunal followed this precedent and concluded that the Assistant Collector could confirm the demand even after Rule 10-A was deleted from the Central Excise Rules, 1944.

Conclusion:
The tribunal dismissed the appeal, finding no merit in the appellants' arguments. It held that the appellants suppressed handling charges, making Rule 10-A applicable. The demand notice was validly issued under Rule 10-A, which had no time limit, and the proceedings could continue despite the rule's deletion. The tribunal also found the cited Supreme Court judgments inapplicable to the present case due to differing facts.